Spotify Stock Hits Record Highs After Transformative Turnaround

Spotify Stock Hits Record Highs After Transformative Turnaround – What’s Next?

Just two years ago, Spotify (SPOT) stock was languishing below $80 per share, wiping out over $35 billion in market value during a turbulent 2022. Fast forward to today, and shares are trading near $500, with the company's market cap skyrocketing from $15 billion to nearly $100 billion.

Spotify Technology S.A. SPOT stock has surged 142% this year, significantly outpacing the technology services industry's 50% growth

This meteoric rise is the result of a bold and sweeping transformation. Spotify embarked on a strategic overhaul that included mass layoffs, leadership shakeups, and a pivot away from its heavy investments in podcasts. At its 2022 Investor Day, the company laid out ambitious goals, including achieving long-term gross margins of 30%-35%, a challenging target given its margins were stuck around 25% at the time.

Spotify’s recent results show those ambitions are becoming reality. In the latest quarter, the company reported a gross margin of 31.1%, a significant improvement from 26.4% a year earlier. CEO Daniel Ek praised his team’s execution during the fiscal third-quarter earnings call, stating, “We’ve never been in a stronger position... We are where we set out to be, if not a little bit further, and on a steady path toward achieving our long-term goals.”

As Spotify hits all-time highs and prepares for its first-ever full-year profitability, one question looms: can it sustain this momentum, or is the market already pricing in peak performance?