SPOT Stock: Will a C-Suite Shakeup Help or Hinder Spotify?

Spotify [SPOT] has evolved from a pure music streaming service into a global audio platform, blending music, podcasts and long-form content. 

With operations in over 180 markets and nearly 700 million users — including some 276 million paying subscribers — it dominates the streaming space. In 2025, it delivered its first full year of profitability, driven by subscriber growth, price increases, ad revenue and tighter cost control. 

At the same time, Spotify is navigating headwinds: scrutiny over CEO Daniel Ek’s defense tech investments has sparked artist withdrawals. 

Perhaps relatedly, it was recently announced that in January 2026 Ek will step into an executive chairman role. Co-CEOs Gustav Söderström and Alex Norström will assume operational leadership. 

Elsewhere, Spotify has been prompted to adopt new disclosure policies around artificial intelligence (AI).

Spotify is also investing in content diversity and filtering AI-generated “spam” tracks as it balances growth with reputational risk.

This article will outline some of the challenges facing SPOT stock, and compare it to two other peers in the space. 

Q2 Earnings

Spotify reported Q2 earnings at the end of July.

It added 8 million net new premium subscribers, reaching a total of 276 million and representing an increase of 12% year-over-year. Monthly active users (MAU) climbed 11% to 696 million. 

“People come to Spotify and they stay on Spotify. By constantly evolving, we create more and more value for the almost 700 million people using our platform,” said Ek on the call. “This value not only benefits users but it’s attracting more people to streaming and, as a result, it’s also boosted the industries of music, podcasts and audiobooks.”

Total revenue rose 10% to €4.2bn, with gross margin improving 227 basis points to 31.5%. Operating income was €406m. 

Despite strong top-line and user metrics, Spotify incurred a net loss of €86m, driven by rising costs and share-based compensation. The company guided operating income of €485m for Q3, citing higher tax burdens, though it expects premium subscriber growth and MAU expansion to continue.

Executives also flagged underperformance in the advertising segment — ad revenues fell around 1% — and acknowledged execution weaknesses, stating the company has “been moving too slowly” on ad initiatives. Their outlook and the earnings miss triggered a 7–11% drop in Spotify’s share price post-results.

Why is Ek Stepping Back?

Daniel Ek’s decision to transition into an executive chairman role reflects both strategic succession and reputational pressures. 

Spotify says the move “formalizes” an operational structure already in place, as co-presidents Söderström and Norström have handled day-to-day leadership for years. However, the timing coincides with backlash over Ek’s investment in defense tech via his venture firm Prima Materia, which prompted several artists to remove their catalogs.

The announcement triggered a 5% drop in SPOT stock, which was worsened by a Goldman Sachs downgrade citing heightened uncertainty. Investors are watching how the co-CEO model performs, if Ek retains real influence in his new role, and whether Spotify can regain artist and audience trust. 

If the transition maintains stability and growth, it may be seen as a maturation. If leadership ambiguity or protests deepen, the stock could remain under pressure.

SPOT stock was up 52.09% in the year to date as of October 7, and up 83.18% in the past 12 months.

SPOT vs SIRI vs TME

Let’s look at SPOT stock’s fundamentals alongside those of two comparable stocks.

Sirius XM [SIRI] is a US audio entertainment company that operates satellite radio services and the Pandora streaming platform, which it owns. In recent results, Sirius XM’s revenue has been under pressure, with ad and streaming segments lagging, but the firm still generates solid cash flows and maintains a modest valuation relative to peers. Analysts often view it as a defensive audio play, with exposure to subscription-based audio and less reliance on global licensing costs.

Meanwhile, Tencent Music [TME] is a leading Chinese music streaming and social audio platform, operating services like QQ Music, Kugou and Kuwo. It benefits from China’s large user base and licensing partnerships, and continues to grow paying users and monetization per user. The firm is exposed to Chinese regulatory and macro risks, but offers geographic diversification that Western peers lack.

Source: Yahoo Finance

Spotify, Sirius XM and Tencent Music each occupy different niches in the audio ecosystem, which shapes their risk/return profiles. Spotify is a global freemium platform with heavy investments in content, podcasts and tech, trading with higher growth expectations and valuation multiples. In contrast, Sirius XM is more of a domestic subscription platform with lower growth, more stable cash flows and lower valuation multiples, making it somewhat defensive in its sector. Tencent Music offers exposure to a fast-growing Chinese market and a larger addressable user base, though it carries country-specific regulatory risk.

SPOT Stock: The Investment Case

The Bull Case for Spotify

Spotify’s scale, global user base and content diversification provide strong growth potential. Expansion into podcasts, audiobooks and AI-driven personalized playlists boosts engagement and monetization per user. International markets and higher average revenue per user in premium subscriptions create further upside. Leadership succession to co-CEOs allows Daniel Ek to focus on strategy while operational management drives execution. Improved advertising tools and partnerships could accelerate revenue growth. With continued innovation, Spotify could increase margins, maintain its dominant platform position and capture a larger share of the growing global audio and digital entertainment market.

The Bear Case for Spotify

Spotify faces regulatory and reputational risks due to Ek’s defense tech investments, which could affect artist participation and consumer sentiment. Competition from Apple’s [AAPL] Apple Music, Alphabet’s [GOOGL] YouTube Music and Tencent Music pressures subscriber growth and engagement. Rising content costs, royalty obligations and international expansion expenses may compress margins. Advertising revenue underperformance and FX volatility could weigh on earnings. Operational risk from co-CEO transition, alongside macroeconomic headwinds, may hinder execution. If user growth slows or monetization fails to scale as expected, Spotify’s high valuation could be vulnerable to sharp share price declines.

Conclusion

Analyst sentiment on SPOT stock remains cautiously optimistic. Recent reports indicate that while some analysts have slightly lowered their price target, the company still maintains a strong position in the audio streaming industry. Analysts continue to view Spotify as a leader in the podcast space, with potential for growth despite operational challenges.