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Valuation · EV/EBITDA model

Is Spotify (SPOT) stock overvalued?

Brief Equity's quick EV/EBITDA model of Spotify, dated October 27, 2026, puts the shares at about $467 for 2028, against a price of $557.13 that day. On those assumptions Spotify looks expensive, with the model's value about 16% below the price. The view rests on most of Spotify's growth from here coming from price increases rather than from new subscribers, while its EBITDA margin holds at 15%.

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By The Brief Equity Team · Model dated · Published

Brief Equity valuation model card for Spotify (SPOT): an EV/EBITDA exit model with projected revenue, EBITDA and margins to 2028 and a value for 2028.
The Spotify model card as captured on October 27, 2026: the model's value, the share price that day and the projection behind them.

The model's assumptions for Spotify

Spotify's fiscal year is the calendar year and it reports in euros, so the tables below are in euros, while the share price and the model's value are in US dollars on its New York listing. The model runs three years, to 2028, and the second table sets the model's revenue beside analyst consensus revenue for the same years.

Reports in EUR. Price and per-share values in USD at 1.1153.

Spotify: model assumptions, 2026 to 2028 (revenue and EBITDA in EUR billions)
202620272028
Revenue, model19.4221.1722.65
Revenue growth, model13.0%9.0%7.0%
EBITDA, model2.913.183.40
EBITDA margin, model15.0%15.0%15.0%
Spotify: model revenue and analyst consensus revenue, 2026 to 2028 (EUR billions)
202620272028
Revenue, model19.4221.1722.65
Revenue, analyst consensus19.5722.4725.53

Why Spotify looks overvalued

Spotify looks expensive at $557.13 if most of its growth from here comes from price increases rather than from new subscribers.

Price increases are doing much more of Spotify's growth than they were. In 2025 Premium average revenue per user fell 1% in euros, and Premium revenue grew mainly because the number of subscribers rose. In the nine months to September 30, 2026, price increases added €0.44 to Premium average revenue per user, while changes in product and market mix took €0.15 off it, and in the third quarter Premium average revenue per user rose 7.5% in constant currency against subscriber growth of 9%.

“For the nine months ended September 30, 2026 and 2025, Premium ARPU was €4.86 and €4.61, respectively, which represented an increase of 5%. This increase of €0.25 is primarily attributable to price increases, resulting in a €0.44 increase in Premium ARPU. This increase was partially offset by changes in product and market mix, decreasing Premium ARPU by €0.15, and unfavorable movements in foreign exchange rates, decreasing Premium ARPU by €0.04.”

Spotify interim condensed consolidated financial statements and operating review for the third quarter of 2026 (Form 6-K), October 22, 2026

Spotify's subscriber growth has slowed, from 11% in 2024 to 10% in 2025 and 9% in the year to September 30, 2026.

Spotify's operating margin has not moved with its pricing. In the third quarter of 2026 its gross margin was a record for a third quarter, but operating expenses rose about 26% against revenue growth of 16%, both as reported, and the operating margin was 13.5%, against 13.6% a year earlier.

Spotify's music royalties for its subscription plans are generally the greater of a percentage of revenue and an amount per user. Asked on the third-quarter call about its agreements with Universal Music Group and Warner Music Group, Spotify's co-chief executive said the agreements run on a two-year cycle and that another renewal is coming up.

“But I can say this is a reoccurring two-year rhythm that we've more or less had forever in Spotify's lifetime. And to your point, now we're coming up on another one.”

Alex Norström, Co-Chief Executive Officer, Spotify third-quarter 2026 earnings call, October 22, 2026

Spotify's revenue in the model grows 13% in 2026, 9% in 2027 and 7% in 2028, with the EBITDA margin held at 15%. At 20 times 2028 EBITDA, the shares come to about $467 in 2028, about 16% below the price. Analyst consensus has revenue growing 14.1% a year from 2025 to 2028, and Spotify's own target for 2030 is revenue growth in the mid-teens a year with an operating margin above 20%.

What has to be true, and what would break it

Spotify looks expensive on this model only while a few things hold, and the view fails if they stop holding.

What has to be true

  • Spotify's subscriber growth keeps slowing, and more of its revenue growth comes from price increases than from new subscribers.
  • Spotify's operating margin stays near the 13.5% it reported for the third quarter of 2026.

What would break it

  • Spotify's subscriber growth stops slowing and stays the larger part of its revenue growth.
  • Spotify's operating margin climbs toward its 2030 target of above 20%.

The parts of Spotify's business

Spotify reports two segments, Premium and Ad-Supported, and in 2025 Premium accounted for all of the year's revenue growth, because Ad-Supported revenue fell slightly.

Spotify by part, 2025 against 2024, as reported before the January 1, 2026 segment recast
Share of revenueShare of revenue growth
Premium89.3%101.2%
Ad-Supported10.7%

Spotify beside its peers

Spotify is compared here with six companies chosen to cover its subscription business, the record labels it pays, and apps that turn free users into paying ones.

  • NFLX: Subscription streaming that grows by raising prices, against Spotify's Premium business
  • SIRI: Paid audio subscriptions, against Spotify's Premium business
  • WMG: A record label on the other side of Spotify's royalty payments
  • UMG.AS: A record label on the other side of Spotify's royalty payments
  • MTCH: A free app that converts users to paid plans and leans on pricing, against Spotify's free tier
  • DUOL: A free app that converts users to paid plans, against Spotify's free tier
Peer comparison table for Spotify (SPOT) and six subscription, music and app companies, with each company's valuation multiples, revenue growth and margin.
Spotify beside Netflix, Sirius XM, Warner Music Group, Universal Music Group, Match Group and Duolingo on trailing multiples, as captured on October 27, 2026.

How the estimate moves with its assumptions

The two pictures below show how far the Spotify estimate moves when its assumptions change: one moves two assumptions at a time, and the other runs the model many times with growth, margin and the exit multiple drawn at random.

Sensitivity grids for Spotify (SPOT): the per-share value as revenue growth, EBITDA margin, the exit multiple, the discount rate and terminal growth change.
How the Spotify estimate changes when two assumptions move together. The exit grids are discounted to today's dollars.
Monte Carlo distribution of per-share outcomes for Spotify (SPOT), with the share price at the model's date and the median outcome marked.
The spread of outcomes for Spotify when growth, margin and the exit multiple vary at random.

Questions about Spotify

These questions about Spotify (SPOT) are answered from the documents listed under Sources.

How many paying subscribers does Spotify have?
Spotify had 306 million Premium subscribers on September 30, 2026, against 281 million a year earlier.
Does Spotify have any debt?
As of September 30, 2026, Spotify said it had no outstanding indebtedness other than lease liabilities, after its exchangeable notes matured on March 15, 2026.
Who controls the votes at Spotify?
At December 31, 2025, Spotify's founders Daniel Ek and Martin Lorentzon together held 69.3% of the voting power.
How much of Spotify's revenue comes from advertising?
In the third quarter of 2026, Ad-Supported revenue made up 10% of Spotify's total revenue.

Sources

The quotations and facts about Spotify (SPOT) on this page rest on the documents below.

About this page

Brief Equity and its team hold no position in Spotify (SPOT) as of October 27, 2026.

This page is research, not investment advice. It describes one model and the assumptions behind it, and market data is delayed. Read how these models are built and our editorial policy.

Related guides: EV/EBITDA explained, How to value a stock yourself (without Excel), What is an analyst price target.

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