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Saturday's Bonus Story 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 leading growth stock in digital entertainment. After plunging 66% in 2022, shares have rallied nearly 700% through the Nov. 4 close. A free report revealing the 7 key indicators that have predicted every major economic collapse since 1929.
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These aren't the signals you'll see on CNBC. Claim Your Free Report Now » 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 break down 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 a 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 hard to overstate. For context, Apple Music did not launch until 2015, by which time Spotify already had more than 70 million users. That early lead underscored Ek's role in putting Spotify ahead of the streaming curve. Importantly, Ek's departure is not performance-related. 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 new roles. It's unclear exactly how the CEO change will affect Spotify. Investors reacted cautiously, with shares falling about 4.2% the day the news was announced. The transition is worth watching, but given Ek's continued involvement and the internal promotions, it need not be cause for alarm. Spotify Posts Large EPS Beat, but Profitability Caveats and Guidance Weigh on Shares Spotify reported solid Q3 2025 results. Revenue was €4.53 billion (approx. $5.02 billion), up 7% year over year and modestly above consensus of €4.23 billion (approx. $4.86 billion). More striking was the company's diluted earnings per share (EPS). Diluted EPS was €3.34 (approx. $3.83), well above consensus of €1.96 (approx. $2.25) — a sizable beat of €1.38 per share. Gross margin rose 53 basis points to 31.6%, roughly 50 basis points better than the company's guidance, and operating margin improved 220 basis points to 13.6%. However, there are important caveats. Management said much of the gross-margin outperformance stemmed from an accounting change related to "rights holder liabilities," a one-time adjustment rather than an indicator of sustained improvement. Also, roughly 40% of the operating-margin gain reflected lower-than-expected "social charges" — payroll- and stock-linked taxes that fell as the company's share price declined during the quarter. In short, the headline EPS beat was partly driven by accounting and timing items rather than purely by underlying operational improvements. These factors tempered enthusiasm. Although monthly active users beat estimates by 3 million, Spotify's Q4 guidance of €4.5 billion (approx. $5.17 billion) came in light, and shares fell about 3.4% after the earnings release. SPOT's Ad-Supported Opportunity Remains Compelling Despite its scale, Spotify's ad-supported tier is under-monetized. About 63% of total users are on the ad-supported tier, yet it generated only 10% of total revenue in Q3. Improving monetization of ad-supported users represents a major growth opportunity. To address this, management is revamping Spotify's ad-supported monetization strategy and expects this segment to reach a healthier growth rate in the second half of 2026. With shares well below peak levels and meaningful upside in ad monetization and other areas, Spotify's long-term outlook remains constructive, though investors should watch how management executes on these opportunities and navigates the CEO transition.
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