Jim Cramer Says High Price to Earnings Multiples Are Hurting Spotify Stock

Spotify Technology S.A. (NYSE:SPOT) is one of the stocks Jim Cramer talked about, along with market froth. Highlighting that the company faces competition from Apple and YouTube, a caller inquired if the stock is a buy, sell, or hold. In response, Cramer said:

I have been watching the stock just shed points and shed points and shed points as the Street turns on it because it sells at a very high price-to-earnings multiple. People no longer like the high price-to-earnings multiple stocks right now. We have to obey that and watch it come in and own it for the long term or sell it and come back later, which may be the way that I would approach Spotify.

Spotify Technology S.A. (NYSE:SPOT) provides audio streaming services. It lets users listen to music and podcasts either through ad-free subscriptions or free, ad-supported access. TCW Concentrated Large Cap Growth Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its third quarter 2025 investor letter:

Spotify Technology S.A. (NYSE:SPOT) (SPOT; Communication Services; 1.21%**) – Headquartered in Sweden, Spotify is the leading audio streaming subscription service with a community of approximately 700 million monthly active users, and over 275 million paying subscribers. The company controls ~1/3 of the global music streaming market, providing SPOT with scale to negotiate with music labels during pricing negotiations. The company manages its business in two segments: premium (~90% of revenues) and ad-supported (~10% of revenues). After not raising prices for over a decade, the company has recently begun to take price with limited impact to customer churn. We believe SPOT has numerous levers to pull to accelerate growth, including adding new users, converting ad-supported users to premium subscribers, and price increases. We are attracted to the company’s scale in a secularly growing market and believe the current share price does not adequately reflect the longer-term cash flow generation potential of the business.

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Disclosure: None. This article is originally published at Insider Monkey.