Spotify (SPOT) Laps the Stock Market: Here's Why

Core Viewpoint - Spotify is showing positive stock performance and is expected to report strong financial results in the upcoming earnings release, indicating growth potential in both earnings and revenue. Financial Performance - Spotify's stock increased by 1.67% to $728.47, outperforming the S&P 500's gain of 0.26% for the day [1] - Over the past month, Spotify shares gained 5.08%, while the Computer and Technology sector gained 7.4% and the S&P 500 gained 2.87% [1] - The upcoming earnings report on November 4, 2025, is projected to show earnings of $1.96 per share, reflecting a year-over-year growth of 23.27%, with revenue expected to reach $4.88 billion, a rise of 11.37% compared to the previous year [2] Annual Estimates - For the full year, earnings are projected at $5.77 per share, a decrease of 3.03% from the prior year, while revenue is expected to be $19.9 billion, an increase of 17.4% [3] Analyst Estimates - Recent modifications to analyst estimates for Spotify are crucial as they reflect short-term business trends, with positive revisions indicating analysts' confidence in the company's performance [4] - Changes in estimates are correlated with near-term stock prices, and investors can utilize the Zacks Rank for actionable insights [5] Zacks Rank and Valuation - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a strong track record, with stocks rated 1 averaging an annual return of +25% since 1988; currently, Spotify holds a Zacks Rank of 3 (Hold) [6] - Spotify's Forward P/E ratio is 124.18, significantly higher than the industry average of 29.71, indicating a premium valuation [7] - The PEG ratio for Spotify is 3.08, compared to the Internet - Software industry's average PEG ratio of 2.27, suggesting higher expected earnings growth relative to its price [8] Industry Context - The Internet - Software industry is part of the Computer and Technology sector, which has a Zacks Industry Rank of 71, placing it in the top 29% of over 250 industries, indicating strong performance potential [9]