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For Your Education and Enjoyment 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 risen nearly 700% through the Nov. 4 close. Something unusual is happening — a specific trade setup that's gone live 22 times has hit its 25% target every single time. No, nothing's guaranteed to last forever, but as long as this edge holds, it could be one of the most consistent opportunities in the market right now. The strategy works on major tickers like GOOG, META, HOOD, and ORCL — and I've laid out exactly how it's done step by step in a brand-new breakdown. Click here to see the full breakdown and learn how the 25% trade works While still about 19% below its all-time high from June, 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 this leadership change and the latest earnings results to explain what they mean for investors. 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 transformed the music industry with Spotify. Apple (NASDAQ: AAPL), which holds the second-largest share of the U.S. music streaming market, did not launch Apple Music until 2015—by that point Spotify already had more than 70 million users. That underscores Ek's role as a pioneer who put Spotify well ahead of the streaming curve. Ek's departure is not performance-related, and he will remain on the board as executive chairman, which should help limit disruption during the transition. Both Söderström and Norström have been with Spotify for over 15 years and bring deep institutional knowledge. How the CEO change will affect Spotify is uncertain. Investors reacted cautiously, sending shares down about 4.2% the day the news broke. The leadership change is worth watching, but it need not be alarming for long-term investors. Spotify Posts Huge EPS Beat, But Profitability Caveats and Guidance Weigh on Shares Spotify reported solid Q3 2025 results. Revenue was €4.53 billion (about $5.02 billion), up 7% year over year and modestly above estimates of €4.23 billion (about $4.86 billion). Diluted EPS was €3.34 (about $3.83), well ahead of expectations of €1.96 (about $2.25) — a beat of €1.38 (around $1.58). The outperformance reflected expansion in both gross and operating margins: gross margin rose 53 basis points to 31.6% (about 50 basis points above the company's guidance), and operating margin improved 220 basis points to 13.6%. There are important caveats, however. Management said much of the gross margin outperformance stemmed from changes in estimates of "rights holder liabilities," a one-time accounting adjustment that does not necessarily reflect stronger underlying performance. Roughly 40% of the operating margin improvement was driven by lower-than-expected "social charges," which are taxes and payroll-related costs that can vary with the company's stock price; as shares declined during the quarter, these charges fell, inflating the margin improvement. In short, the EPS beat was partly driven by accounting and timing effects rather than pure operational gains. Those factors tempered enthusiasm. Despite adding 3 million users, Spotify's Q4 guidance of €4.5 billion (about $5.17 billion) came in lighter than many had expected, and shares fell roughly 3.4% after the release. SPOT’s Ad-Supported Opportunity Remains Compelling Spotify's ad-supported tier remains under-monetized. Although roughly 63% of its total user base is on the ad-supported plan, that cohort generated only about 10% of total revenue in Q3. More effective monetization of ad-supported users would be a major opportunity for the company. To that end, management is revamping Spotify's ad-supported monetization strategy and expects this part of the business to hit a healthier growth rate in the second half of 2026. With shares well below prior highs and meaningful opportunities ahead, Spotify's outlook remains constructive for investors who focus on the company's long-term monetization potential.
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