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Thursday's Bonus News Spotify Posts Huge EPS Beat: Shares Are Still Down Big From HighsWritten by Leo Miller. Published 11/5/2025. 
Key Points - Spotify is getting ready to introduce not one, but two new CEOs to replace the firm's pioneering founder.
- See why Spotify's massive EPS beat didn't lead shares to move higher.
- SPOT remains down nearly 20% from highs, and its ad-supported customer base provides a significant growth opportunity.
Spotify Technology (NYSE: SPOT) has long dominated music streaming, cementing its status as a top growth stock in digital entertainment. After plunging 66% in 2022, shares have climbed nearly 700% through the Nov. 4 close. While still about 19% below its June all-time high, recent developments—including a CEO transition and an earnings beat—could reshape the company's trajectory. The firm recently announced that its long-time Chief Executive Officer (CEO), Daniel Ek, is stepping down. Below, we'll examine that leadership change and Spotify's latest earnings results, and what they mean for investors going forward. Spotify's Leadership Shakeup: From Visionary Founder to Collaborative Approach On Jan. 1, 2026, Gustav Söderström and Alex Norström will become co-CEOs of Spotify, replacing Daniel Ek, who founded the company and has led it since 2006. Ek's impact on the music industry is clear. Apple (NASDAQ: AAPL), which holds the second-largest share of the U.S. music streaming market, didn't launch Apple Music until 2015. By then, Spotify already had more than 70 million users, highlighting how Ek put Spotify ahead of the streaming curve. Importantly, Ek's departure isn't performance-related, and he will remain on the board as executive chairman, which should help limit disruption. Both Söderström and Norström have been with Spotify for more than 15 years and bring deep institutional knowledge to the roles. Investors reacted cautiously, with shares dipping about 4.2% the day the news was announced. The leadership change is worth monitoring, but it shouldn't necessarily trigger alarm among long-term shareholders. Spotify Posts Huge EPS Beat, But Profitability Caveats and Guidance Weigh on Shares Spotify reported strong Q3 2025 results. Revenue was €4.53 billion (approx. $5.02 billion), up 7% and modestly above estimates of €4.23 billion (approx. $4.86 billion). More striking was the profit performance: diluted earnings per share (EPS) came in at €3.34 (approx. $3.83), well above expectations of €1.96 (approx. $2.25). Gross margin rose 53 basis points to 31.6%, about 50 basis points ahead of the company's guidance, and operating margin expanded 220 basis points to 13.6%. However, there are important caveats. Management said much of the gross margin outperformance resulted from changes in estimates to "rights holder liabilities," a one-time accounting adjustment rather than an ongoing operating improvement. Additionally, roughly 40% of the operating margin gain reflected lower-than-expected "social charges" — payroll- and stock-related charges that fell as the company's share price declined during the quarter. In short, the headline EPS beat was amplified by accounting and timing effects rather than purely by underlying revenue or recurring margin expansion. Those factors tempered investor enthusiasm. Although Spotify added 3 million users, its Q4 guidance of €4.5 billion (approx. $5.17 billion) came in lighter than analysts had expected, and shares fell about 3.4% after the report. SPOT's Ad-Supported Opportunity Remains Compelling Despite its scale, Spotify's ad-supported tier remains under-monetized. Roughly 63% of users are on the ad-supported plan, yet it generated only about 10% of total revenue in Q3. Extracting more value from ad-supported listeners would be a major growth lever for the company. To that end, management is revamping Spotify's ad-supported monetization strategy and expects that segment to achieve healthier growth in the second half of 2026. With shares well off their highs but meaningful opportunities ahead, Spotify's outlook remains cautiously positive for long-term investors.
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