Spotify Technology S.A. · SPOT · NYSE
My estimate (a forecast, not a fact)
EUR 502.33 / share
Market price, 26 Oct 2026
EUR 521.63
Difference
−3.7%
What Spotify does
Spotify sells music, podcasts and audiobooks two ways: a Premium subscription, or free listening paid for by ads. Premium is about 90% of the €18.8 billion of revenue over the last 12 months. It has 306 million paying subscribers out of 788 million monthly users. Subscriber growth has slowed from 45% a year before 2020 to about 10% now, and since 2023 price increases have started to lift revenue per subscriber again.
Spotify only just became profitable. It lost money at the operating line in 8 of the 9 years to 2023. Over the last 12 months its operating margin was 14.6%, the highest it has ever reported. The whole argument is about how far that margin goes from here.
How I valued it: the intrinsic value
I valued Spotify twice, in two separate models. In Part I, I forecast Spotify's cash flows as a whole: revenue growth, margin, reinvestment, risk. In Part II, I take it to pieces: the value of the subscribers it has, plus the value of the ones it will acquire, minus the corporate costs no subscriber pays for.
For the whole-business value, three assumptions do the work. Revenue grows 13% next year, which is management's guidance, then 17% a year for years 2 to 5, in line with what Spotify did from 2020 to 2025. The operating margin rises from 15% to 18% by year 5, with gross margin held where it is today and operating costs growing slower than revenue. And after year 10, Spotify earns 11% on new capital, above its cost of capital, because I believe music streaming will not go away. The cost of capital is 8.60%.
Put together, revenue grows from €18.8 billion to €60.5 billion in year 10. The 10 years of cash flows are worth €30.4 billion today, and the terminal value another €64.1 billion, 68% of the total. That's €94.5 billion for the business. Add €9.9 billion of cash and €1.1 billion of investments, mostly the Tencent Music stake. Take off €452 million of lease debt and €1.2 billion for employee options, and divide by 206.6 million shares. My intrinsic value of a Spotify share is €502.33.
The subscriber value
Now the subscriber model. One existing subscriber is worth €108.43, assuming 90% of them renew each year, a life of up to 15 years, and revenue per subscriber growing 3.5% a year. The 306 million Spotify has are worth €33.2 billion. Acquiring a new subscriber costs €30.14, and the subscribers it will acquire are worth €106.0 billion. Corporate costs take €54.2 billion away. That leaves €85.0 billion for the business.
As a sanity check, the cash operating margin this implies is 16.1% in year 1, against management's Q4 guidance of 15.8%, and it rises to 27.3% by year 10.
Add the cash and the investments, take off the debt and the options, and divide by 206.6 million shares. The subscriber value of a Spotify share is €456.41.
Conclusion
The two values are €46 apart, about 9%, and they take opposite routes. The subscriber model has less revenue, €49.8 billion in year 10 against €60.5 billion. But it has a higher margin, because corporate costs grow with subscribers while revenue grows with subscribers and price.
My intrinsic value of a Spotify share is €502.33, and my subscriber-based value is €456.41. Against the market price of $584.22 a share, or €521.63, the price is ~4% higher than my first estimate (intrinsic) and 14% higher than the second (subscriber-based).
| Part I: intrinsic (DCF) | Part II: subscribers | |
|---|---|---|
| Value of operating assets (€m) | 94,487 | 85,000 |
| Value per share | €502.33 | €456.41 |
| Price, 26 October 2026 | €521.63 ($584.22, NYSE) | €521.63 ($584.22, NYSE) |
| Price as % of value | 103.8% | 114.3% |
The full video goes through every input of both models.
| Files Subscribe to download |
|---|
| Valuation model The FCFF model behind the estimate — every input, every year, and the value it produces. XLSX · 26 KB |
| Sensitivity table Value per share across two assumptions — revenues in year 10 and target pre-tax operating margin. XLSX · 44 KB |
| Subscriber valuation The second valuation — existing subscribers, new subscribers and corporate costs, with every input and the value per share it produces. XLSX · 30 KB |
| Market sizes The total addressable market size estimates for single- or multi-business companies — TAM size, CAGR, implied market share, sources, caveats, etc. XLSX · 55 KB |
| Spotify financial statements Income statement, balance sheet and cash flow as reported in Spotify's 20-F and 6-K filings, with the last-12-months build and the valuation inputs taken from them. XLSX · 33 KB |
| Spotify users and subscribers Monthly active users, Premium subscribers, ad-supported users and revenue per user, from 2015 to the last 12 months. XLSX · 8 KB |
Sensitivity
Estimated value per share in EUR, across the two assumptions that move it most. Rows are revenue in year 10 (€bn); columns are target pre-tax operating margin (%). Shaded cells clear the EUR 521.63 price at publication.
My own case is highlighted — EUR 502. Every row here grows revenue at a single constant rate to its year-ten figure, so it does not land exactly on my EUR 502.33 estimate.
| Revenue in year 10 (€bn) | Target pre-tax operating margin (%) | ||||||
|---|---|---|---|---|---|---|---|
| 10 | 15 | 20 | 25 | 30 | 40 | 50 | |
| 42.4 | 232 | 319 | 407 | 494 | 582 | 756 | 931 |
| 51.5 | 262 | 366 | 470 | 574 | 678 | 886 | 1,094 |
| 60.5 | 291 | 412 | 532 | 653 | 773 | 1,014 | 1,255 |
| 69.6 | 321 | 457 | 594 | 731 | 868 | 1,141 | 1,415 |
| 78.7 | 349 | 502 | 655 | 808 | 961 | 1,268 | 1,574 |
| 96.9 | 406 | 591 | 777 | 962 | 1,147 | 1,518 | 1,888 |
| 118.1 | 472 | 694 | 917 | 1,139 | 1,362 | 1,807 | 2,252 |
Disclosure
- Position
- As at 26 October 2026, I do not own shares in Spotify. This covers shares held by people closely associated with me. It is a snapshot: if it changes, it changes in a new valuation, never by editing this one. I hold no position, long or short, exceeding 0.5% of Spotify's issued share capital.
- Author
- Lucian Mesaroș, independent equity analyst, sole author of this publication, publishing in a personal capacity as an individual. I am not authorised or supervised by the ASF or by any other financial supervisory authority, I am not an investment firm, and I do not provide investment advice.
- Valuation date
- 26 October 2026. First published 2 November 2026.
- Market price used.
- EUR 521.63 — NYSE close of $584.22 on 26 October 2026, converted at 1.12 USD/EUR on NYSE, 26 October 2026. The percentage difference on this page compares my estimate to that price on that date, and is not updated afterwards.
- What the number is
- EUR 502.33/share is my estimate of intrinsic value, produced by a discounted cash flow (FCFF) model. It is a forecast and an opinion, not a fact, not a price target I undertake to defend, and not a prediction of where the share price will go. Two independent valuations. The first is a free-cash-flow-to-the-firm discounted cash flow: revenue is forecast for 10 years, the operating margin converges to a long-run target, reinvestment is set by a sales-to-capital ratio, and the cash flows are discounted at the cost of capital, with a terminal value in which the return on new capital is 11%. The second values Spotify subscriber by subscriber: the value of existing subscribers plus the value of the subscribers it will acquire, minus the present value of corporate costs no subscriber pays for. The two models share no inputs; the estimate is the first, and the second is a cross-check. The full framework is at Methodology.
- Key assumptions
- Revenue grows 13% in year 1 (management guidance), then 17% a year in years 2–5, fading to the 3.34% risk-free rate by year 10 · Operating margin of 15% in year 1 (management guidance), rising to an 18% target by year 5 with the gross margin held at 32–33% · Sales to capital of 10 for years 1–5 and 5 for years 6–10 · Tax rate of 23.87%, the Luxembourg statutory rate, with €760 million of past losses used in year 1 · Cost of capital of 8.60%, falling to 7.54% after year 10 · Return on capital after year 10 of 11% · R&D capitalised over 3 years; the €452 million of lease liabilities is the only debt · Subscriber cross-check (no shared inputs) — 90% annual renewal, 15-year subscriber life, revenue per subscriber growing 3.5% a year, subscribers growing 8% then 5% then 1%, corporate costs growing with subscribers, €456.41 a share
- How wrong this can be
- Valuations are sensitive to assumptions I chose — the sensitivity table above shows what the estimate becomes when the two that matter most turn out differently. A small change moves the estimate materially. I can be, and have been, wrong.
- Time horizon
- At least 1 year, and normally far longer. I have no view on what the share price does over the coming weeks or months, and nothing here is a short-term call. Separately, this document stands until I next value Spotify — see What I've Published.
- Updates
- I revalue a company when it publishes annual results, or when something material changes. There is no guaranteed schedule, and no undertaking to update this page.
- Conflicts of interest
- I have no agreement of any kind with Spotify or with anyone connected to it, I have not been paid by anyone to produce this valuation, no one asked me to write it except through the public request page, no draft was shown to the company, and I am not a market maker, liquidity provider or adviser to it.
- Previous valuations of Spotify
- None in the last 12 months.
- Sources
- Spotify Technology S.A., Form 20-F for the fiscal year ended 31 December 2025 · Spotify Technology S.A., Form 6-K reports for Q1, Q2 and Q3 2026 · Spotify, Q3 2026 shareholder deck and earnings call prepared remarks · Spotify, 2018 IPO prospectus (subscriber churn) · market-data.xlsx, the music, podcasting and audiobook market sizes published with this valuation · Eurostat, euro-area inflation release, 16 October 2026 · Aswath Damodaran, industry betas, equity risk premiums and the user-based valuation framework All figures are as reported by the company unless I say otherwise.
- Everything I have published in the last 12 months:
- What I've Published