Spotify beats Q3 expectations, but stock still sinks

When good still isn’t good enough.

Despite beating analyst expectations for Q3, Spotify’s stock sank 2% on Tuesday after its earnings call. According to Rolling Out, the stock price has risen 70% in the past year, and shareholders may have sold to lock in profits, as Spotify’s fourth quarter guidance looked a little lukewarm.

The Swedish audio company earned 4.27 billion euros ($4.9 billion) in Q3 revenue, above the 4.23 billion euro Bloomberg analysts predicted, and up 12% YoY. And monthly active users increased to 713 million, above the estimated 711 million.

But the Q4 forecast wasn’t as lofty. Spotify predicted 4.5 billion euros in quarterly revenue, “citing currency headwinds,” according to Rolling Out, while analysts expected 4.57 billion. Also, music licensing agreements with the major labels are Spotify’s largest expense, and a series of expensive renewal deals this year “add[ed] pressure to content costs,” Rolling Out reported.

“The revenue guidance miss, even if modest, likely contributed to the stock decline as investors who had bid shares higher in anticipation of stronger forward projections reassessed their positions,” the outlet said.

Spotify CFO Christian Luiga said in the call that the company will “continue to see 2025 as a transition year for ads business and expect growth to improve in the back half of 2026.”

But 2026 will also be a year of executive transition. Founder and CEO Daniel Ek will end his tenure at the tail of 2025, ushering in chief product and technology officer Gustav Söderström and chief business officer Alex Norström as co-CEOs. And the audio giant is positioning itself for the new world of video podcasts, having recently announced a deal with Netflix to stream podcasts, including from pop culture and sports podcasting network The Ringer, on the platform.