Nancy Tengler recently dubbed Spotify Technology SA, (NYSE:SPOT), a name that was “recession proof”. The earnings reported by the company for their financial fourth quarter confirmed her opinion on Tuesday.
Spotify is a service that has proved to be resilient, as its users have continued to use it despite economic difficulties.
Spotify announced a 12 percent increase of its active monthly users, which now total 675 millions.
Comparatively, analysts were only expecting a 5.0% rise.
The audio streaming service and media provider also predicted an additional 3 million users for Q1 — about one million more than the experts had forecast.
Spotify shares rose as high as 9.0% today following the release of its Fourth-Quarter earnings.
Spotify remains popular despite price hikes
Spotify’s free tier, which is ad supported, continues to draw a large user base. This serves as a channel for users to convert to the premium subscription service.
The model guarantees a constant stream of premium subscribers in the future.
Spotify has also been able maintain a relatively low rate of churn despite price increases, showing that users are willing to pay more. This further supports Tengler’s claim that Spotify will survive any recession.
Spotify does not pay dividends at the moment.
Spotify made a profit in its Q4 fiscal
Spotify’s diverse set of services, such as audiobooks and Podcasts, makes it better equipped to weather an economic recession.
The audio streaming service and media company beat Street revenue estimates in the fourth fiscal quarter of its fiscal year on Tuesday.
Spotify made a profit per share of EUR1,76 ($1.82) on revenues totaling EUR4.24 Billion for the Q4 period.
Analysts had predicted a revenue of EUR4,15 billion. Daniel Ek is the chief executive of the company. He told investors today in a earnings announcement:
Our goal is to continue placing bets with a long-term effect, while increasing our efficiency and speed.
The Spotify share price is up 30% since 2025.
What is the upside potential of Spotify?
Spotify’s stock is up today despite the fact that management has lowered its Q1 revenue guidance.
Spotify’s first quarter revenue is expected to be EUR4.2 billion, a little less than the EUR4.3 billion analysts predicted.
According to Daniel Ek, CEO of the company, we will strive to “build the most useful and valuable user experience possible. We’ll grow sustainably. And deliver creativity around the globe.”
Wall Street has currently given Spotify shares a “overweight rating” by consensus.
Street’s high price target is $645, or an increase of 8.0% over current prices.
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