Spotify Jumps 10% as Premium Subscriber Growth Tops Forecasts; Sirius XM Stays Put
Spotify stock surged while the rest of the media sector stumbled, powered by a subscriber count that outran its own guidance and a fourth-quarter target that raised the stakes even higher. The question now is whether the company's audiobook bet…
A third-quarter subscriber count that exceeded its own guidance has put Spotify Technology (NYSE:SPOT | SPOT Price Prediction) at the front of a soft media group. Spotify stock is at $579.49, up 10% in morning trading after a subscriber beat and a year-end target that both landed ahead of Wall Street’s expectations.
Even after the jump, Spotify stock sits down 3% year to date. The Communication Services Select Sector SPDR ETF (NYSEARCA:XLC) is down 1%, and the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.82%, so Spotify stock is moving against both its sector and the wider market.
Recent price increases at Spotify haven’t stalled paid sign-ups. Premium average revenue per user at the company rose 9.3% year over year alongside 9% subscriber growth. Management credits audiobooks with lifting acquisition, retention and active days.
Subscriber Beat and a Bigger Q4 Target Power Spotify
Spotify reported Q3 2026 results on October 22, with Premium subscribers reaching 306 million, 1 million ahead of guidance and above analyst estimates. Co-CEO Alex Norström said “this quarter, that growth came from every region,” with the rest of the world and Latin America leading. The quarter brought 6 million net subscriber additions.
Spotify’s Q4 2026 outlook calls for 316 million Premium subscribers, a net addition of 10 million, ahead of analyst expectations. Management guided to €820 million in operating income, above consensus. It also projected a 33.8% gross margin, a step up from Q3 even after initial investment in audiobooks and the Spotify Partner Program.
Sirius XM Slips While Spotify Runs Alone
Meanwhile, Sirius XM Holdings (NASDAQ:SIRI) shares are at $26.85, down 0.4%, limiting the rally to Spotify stock. The models differ, since Spotify earns mostly from streaming plans while Sirius XM sells radio subscriptions largely through vehicles. Optimists point to Sirius XM’s new YouTube advertising partnership, while skeptics see slow revenue growth and dependence on car sales.
Spotify’s sales rose 16.3% year over year to $5.58 billion, exceeded consensus, as Premium revenue grew 17% to $5.04 billion. That scale sets Spotify apart from smaller audio players such as LiveOne (NASDAQ:LVO), which runs Slacker and PodcastOne. Favorable currency movements flattered the headline growth.
Gross margin at Spotify hit a record Q3 level of 33%, up 136 basis points, as Premium growth outpaced music costs. Ad-supported revenue at the company grew 9% at constant currency versus 3% in each of the first two quarters, led by automated programmatic sales, and management expects further progress toward double-digit ad growth in Q4.
Spotify’s Subscriber Growth Faces Its Next Test
Spotify’s GAAP diluted earnings per share of $2.79 missed the $2.85 consensus after social charges tied to share-based compensation ran above forecast. Operating expenses at the company grew 26% year over year, outpacing revenue. At a P/E ratio of 49x, Spotify stock leaves little cushion if subscriber growth cools.
The bull case gets support from a balance sheet with no debt other than lease liabilities. Buybacks at Spotify reached $1.1 billion through October 21, aimed at neutralizing dilution from employee equity programs.
Operating-expense growth should moderate in Q4. Management expects the pace to keep slowing into 2027, and the next test is whether that discipline protects margins during the audiobook rollout to more than 180 markets. Traders may prefer to keep their SPOT stock exposure smaller until the durability of Spotify’s subscriber growth resolves.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
