Oppenheimer upgrades Spotify on long-term growth potential, sees 19% upside

Spotify Technology S.A. has received a vote of confidence from Oppenheimer, with the firm citing the streaming giant’s strong subscriber growth, expanding profit margins, and underutilized monetization channels as key drivers of long-term revenue expansion.

Analyst sees $800 price target amid strong fundamentals

Oppenheimer analyst Jason Helfstein upgraded Spotify’s stock rating from perform to outperform on Wednesday, assigning a price target of $800 per share.

This implies a potential upside of nearly 19% from current levels.

The upgrade is underpinned by Helfstein’s belief that Spotify stands to benefit from a secular shift in consumer preferences toward digital audio streaming.

“We believe that SPOT will benefit from the secular tailwind of growing digital audio streaming adoption and that the company’s subscription economics are better than most believe,” Helfstein wrote in his report.

Spotify shares jumped 2% on Thursday and have already risen 51% year-to-date, bolstered by improving financials and investor optimism about its future monetization potential.

The Luxembourg-based company, which recently reported its first full year of profitability, continues to demonstrate momentum in both subscriber growth and operational performance.

Revenue and subscriber growth outlook through 2030

According to Oppenheimer’s projections, Spotify’s compound annual revenue growth could reach 16% through 2030.

This growth is expected to be supported by two primary factors: a 9% annual increase in subscribers and a 21% rise in average revenue per subscriber.

Spotify’s first-quarter results, released in April, highlighted continued strength in its core business.

The company reported a 12% year-over-year increase in premium subscribers, bringing the total to 268 million.

Additionally, gross profit margin improved by four percentage points to 31.6%.

Helfstein noted that while Spotify has historically under-monetized its free tier, using it largely as a funnel to convert users to paid subscriptions, this strategy is starting to yield more meaningful returns.

The company is actively scaling its advertising business and exploring new ways to unlock value from its large base of free users.

Product innovation and market expansion support bull case

Oppenheimer identified multiple strategic tailwinds for Spotify’s growth.

The analyst believes Spotify has the “longest runway” among large-cap internet stocks to grow its monthly active user base, especially as it captures listeners migrating from terrestrial radio.

In the fourth quarter, Spotify reported 675 million monthly active users, beating consensus estimates of 664.3 million.

Helfstein also highlighted the upcoming launch of a higher-priced “Superfan” tier, which is expected to boost revenue further.

Additionally, changes to Apple’s App Store rules, following a court ruling, have made it easier for iOS users to convert from free to paid subscriptions, another factor expected to support Spotify’s conversion efforts.

Looking ahead, Spotify’s strategic focus on monetization, user growth, and product innovation positions it as a compelling long-term investment, according to Oppenheimer.

With its upgraded rating and bullish price target, the firm sees Spotify as a leader in the next phase of digital audio evolution.

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