Spotify (SPOT) Stock Drops Despite Market Gains: Important Facts to Note

In the latest trading session, Spotify (SPOT) closed at $709.95, marking a -1.69% move from the previous day. This change lagged the S&P 500's daily gain of 0.28%. Elsewhere, the Dow gained 0.43%, while the tech-heavy Nasdaq added 0.09%.

Shares of the music-streaming service operator have appreciated by 1.83% over the course of the past month, underperforming the Computer and Technology sector's gain of 6.2%, and the S&P 500's gain of 4.37%.

Investors will be eagerly watching for the performance of Spotify in its upcoming earnings disclosure. The company's earnings report is set to be unveiled on July 29, 2025. The company's earnings per share (EPS) are projected to be $2.29, reflecting a 60.14% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.79 billion, up 16.93% from the year-ago period.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $9.22 per share and a revenue of $19.94 billion, signifying shifts of +54.96% and +17.6%, respectively, from the last year.

It is also important to note the recent changes to analyst estimates for Spotify. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.43% lower. Spotify presently features a Zacks Rank of #3 (Hold).

In the context of valuation, Spotify is at present trading with a Forward P/E ratio of 78.31. This indicates a premium in contrast to its industry's Forward P/E of 29.03.

We can additionally observe that SPOT currently boasts a PEG ratio of 1.9. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As of the close of trade yesterday, the Internet - Software industry held an average PEG ratio of 2.24.

The Internet - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 62, placing it within the top 26% of over 250 industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow SPOT in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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