Spotify Technology S.A. (SPOT): A Bull Case Theory

We came across a bullish thesis on Spotify Technology S.A. on Investment Ideas by Antonio’s Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on SPOT. Spotify Technology S.A.'s share was trading at $703.79 as of August 20^th. SPOT’s trailing and forward P/E were 156.62 and 73.53 respectively according to Yahoo Finance.

Spotify’s Q2 2025 earnings call highlighted three critical developments that suggest its value creation process is entering a new phase of acceleration. First, video consumption on the platform is growing 20 times faster than music consumption since 2020, expanding user engagement and monetization potential. Second, Spotify is retooling its technology stack with natural language capabilities, enabling generative AI integration through model context protocols that allow products to be created dynamically.

Third, the company now possesses a richer dataset than ever before, elevating the quality of its iterative process and positioning it as a “Singularity Scaler,” where value creation accelerates in tandem with AI advancements. While the market reacted negatively to Q2 results, with shares dropping over 10% due to short-term expense increases and temporary headwinds, Spotify achieved record Q2 net additions, exceeding guidance by 7 million monthly active users and 3 million premium subscribers.

Management emphasized that prioritizing lifetime value over arbitrary profit targets remains the guiding principle, with investments flowing where subscriber acquisition cost-to-lifetime value ratios provide attractive returns. CEO Daniel Ek and CPO Gustav Söderstrom underscored how LLM-driven features such as AI DJ will unlock richer user signals, transforming engagement into scalable value as AI models improve with data and usage.

This dynamic creates a self-reinforcing cycle where Spotify’s scale advantage compounds faster than peers. Despite near-term financial noise, these structural shifts suggest an inflection point, with long-term shareholder value creation set to accelerate as investments in video, generative AI, and user signal capture compound.

Previously we covered a bullish thesis on Spotify Technology S.A. (SPOT) by Kroker Equity Research in April 2025, which highlighted the company’s shift to profitability driven by pricing power, cost discipline, and improved monetization. The company’s stock price has appreciated approximately by 18% since our coverage. This is because the thesis played out with strong free cash flow. Antonio Linares shares a similar view but emphasizes Spotify’s acceleration from video adoption, generative AI, and richer datasets.

Spotify Technology S.A. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held SPOT at the end of the first quarter which was 0 in the previous quarter. While we acknowledge the potential of SPOT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.