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Despite strong user growth, the company missed earnings and revenue expectations and issued a cautious forecast, which shook investor confidence.Wall Street analysts rerated the stock after the quarterly results. JP Morgan analyst Doug Anmuth reiterated an Overweight rating on Spotify, suggesting continued confidence in the company’s long-term prospects despite the near-term headwinds.Similarly, Goldman Sachs analyst Eric Sheridan maintained a Buy rating, underscoring his positive outlook with a reaffirmed price forecast of $775.Also Read: Spotify User Base Grows, But Profitability Concerns LingerWhile these endorsements from analysts indicate underlying belief in Spotify’s business model, the immediate market reaction highlights the Street’s sensitivity to financial performance deviations.Anmuth noted Spotify is executing well on its medium-term financial targets of achieving 30-40% gross margins and 10%+ operating margin.The analyst credited product optimizations and effective marketing for driving solid growth in both users and premium subscribers, while Spotify continues to invest in its core offerings, including audiobooks, video podcasts, and music.However, second-quarter results and third-quarter guidance were mixed, he noted. Spotify delivered stronger-than-expected MAUs and premium subscriber growth, but foreign exchange (FX) headwinds and social charges weighed on revenue, gross margin, and operating income, Anmuth said.The analyst said the company posted a second-quarter gross margin of 31.5%, which was in line with both guidance and consensus. But he noted that its third-quarter gross margin forecast of 31.1% came in slightly below JPMorgan’s 31.3% estimate, factoring in a ~40bps regulatory charge.Spotify guided for third-quarter FX-neutral revenue growth of 10%, signaling a ~500bps deceleration, though that figure may not reflect potential price increases, Anmuth noted. Notably, Spotify doubled its share buyback authorization to $2 billion. He will watch to see whether this marks a shift toward more consistent capital returns or remains opportunistic.In the second quarter, Spotify generated 700 million euros in free cash flow, beating JPMorgan’s 641 million euros estimate, and delivered operating income of 406 million euros. This included 116 million euros in social charges but still fell short of management’s 539 million euros forecast. JPMorgan and consensus estimates stood at 457 million euros and 490 million euros, respectively.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,454.75 +58.50 (+0.91%)Dow Futures44,754.00 +121.00 (+0.27%)Nasdaq Futures23,791.25 +310.75 (+1.32%)Russell 2000 Futures2,233.90 -7.60 (-0.34%)VIX15.48 -0.50 (-3.13%)Gold3,346.00 -6.80 (-0.20%)PortfolioSign in to access your portfolioSign inTop gainersWING Wingstop Inc. 368.26 +77.96 (+26.86%)FTAI FTAI Aviation Ltd. 144.46 +30.32 (+26.56%)PIII P3 Health Partners Inc. 7.30 +1.50 (+25.86%)GNRC Generac Holdings Inc. 181.00 +29.68 (+19.61%)TER Teradyne, Inc. 107.65 +17.10 (+18.88%)Top losersNEGG Newegg Commerce, Inc. 44.97 -11.22 (-19.97%)CAR Avis Budget Group, Inc. 172.46 -31.42 (-15.41%)SLGN Silgan Holdings Inc. 47.30 -8.50 (-15.23%)CHKP Check Point Software Technologies Ltd. 186.67 -31.66 (-14.50%)ENTG Entegris, Inc. 79.34 -13.41 (-14.46%)Most activeSOFI SoFi Technologies, Inc. 21.87 -0.53 (-2.37%)NVDA NVIDIA Corporation 179.27 +3.76 (+2.14%)LCID Lucid Group, Inc. 2.5000 -0.0600 (-2.34%)TSLA Tesla, Inc. 319.04 -2.16 (-0.67%)F Ford Motor Company 10.87 -0.21 (-1.90%)Earnings eventsTrending tickersMSFT Microsoft Corporation 513.24 +0.67 (+0.13%)META Meta Platforms, Inc. 695.21 -4.79 (-0.68%)NVDA NVIDIA Corporation 179.27 +3.76 (+2.14%)AMZN Amazon.com, Inc. 230.19 -0.82 (-0.35%)HOOD Robinhood Markets, Inc. 106.10 +2.78 (+2.69%)Top economic events