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Spotify (SPOT) Stock Drops 6% as Premium Bug and Analyst Downgrade Spark Sell-Off

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SPOT Stock Card

Key Takeaways

  • Spotify (SPOT) dropped 6.62% Thursday following a significant technical malfunction that caused Premium subscribers to experience advertisements and had their accounts appear as free-tier memberships.
  • The technical failure sparked worries about customer retention and system dependability.
  • Institutional shareholder Alecta Tjanstepension Omsesidigt reduced its SPOT holdings, contributing to downward momentum.
  • Evercore ISI lowered its SPOT price target from $700 down to $650, while maintaining an Outperform designation.
  • SPOT shares have declined 11.02% since the beginning of the year, with InvestingPro analysis indicating the stock trades above its Fair Value estimate.

Shares of Spotify tumbled 6.62% Thursday, weighed down by a perfect storm of platform malfunction, reduced Wall Street expectations, and institutional investor exits.


SPOT Stock Card
Spotify Technology S.A., SPOT

Trouble emerged when Premium-tier subscribers experienced an unexpected technical failure that began displaying advertisements and downgraded their account status to resemble free memberships. For a streaming giant whose revenue engine runs on premium subscriptions, such a malfunction represents far more than a minor inconvenience.

The technical mishap eroded investor confidence in the platform’s stability during a critical period, with the company’s quarterly financial report on the horizon. Even subtle indications that premium customers might reassess their membership decisions capture immediate market attention.

Selling momentum accelerated throughout Thursday’s trading session. News surfaced that institutional stakeholder Alecta Tjanstepension Omsesidigt had reduced its SPOT stake. Additional shareholders appeared to secure profits, amplifying the day’s losses.

Evercore ISI Reduces Price Expectations

Evercore ISI adjusted its price objective for SPOT downward this week, revising it from $700 to $650. Despite the reduction, the firm maintained its Outperform designation and simultaneously increased its financial forecasts for the streaming company.

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The adjustment stems from recalibrated assumptions regarding currency strength and taxation rates rather than diminished faith in Spotify’s core operations. Evercore ISI currently anticipates gross margins reaching 35.4% by 2028, surpassing the consensus Wall Street estimate of 34.9%.

According to the firm, market participants continue to undervalue Spotify’s Two-Sided Marketplace — the suite of promotional and advertising tools offered to musicians and record companies for platform visibility.

Other Wall Street firms have similarly recalibrated their forecasts. Cantor Fitzgerald maintains a $525 target with a Neutral stance. Guggenheim positions at $600 with a Buy recommendation. Jefferies and Benchmark both carry Buy ratings at $650 and $760 respectively.

This broad range in analyst perspectives highlights the ongoing discussion surrounding how to properly assess Spotify’s expansion potential against its current valuation.

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Valuation Questions Persist

InvestingPro analysis indicates the stock currently trades above its Fair Value calculation, despite Thursday’s selloff. SPOT has surrendered 11.02% of its value since January began.

Five Wall Street analysts have recently upgraded their earnings projections, and the streaming giant carries a PEG ratio of 0.47, indicating the market may be underestimating anticipated growth rates.

Spotify’s gross profit margin stands at 32% across the trailing twelve months. Management has prioritized margin expansion, and analyst models suggest upward potential.

Fourth-quarter operating income exceeded previous projections by 8%, or 1% when excluding social charges, based on Cantor Fitzgerald’s analysis of the financial results.

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Regarding artificial intelligence developments, Jefferies observed that Google’s introduction of the Lyria 3 music generation capability within the Gemini application warrants monitoring, though the firm retained its Buy rating, implying confidence that Spotify can navigate the competitive threat.

Shares concluded Thursday’s session with a market capitalization of $106.4 billion, accompanied by typical daily trading volume around 2.86 million shares.

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Crypto World

Morgan Stanley Pushes Closer to Bitcoin ETF With Amended SEC Filing

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Morgan Stanley Pushes Closer to Bitcoin ETF With Amended SEC Filing

Morgan Stanley filed a second amended S-1 for its proposed spot Bitcoin exchange-traded fund (ETF), detailing seed capital, trading partners and listing plans as the Wall Street bank moves closer to launching the product under the ticker MSBT.

The amended filing says the trust expects to raise $1 million through the sale of 50,000 initial seed shares to its delegated sponsor ahead of listing on NYSE Arca, then use the proceeds to buy Bitcoin (BTC) for the fund. Morgan Stanley said the fund remains subject to regulatory approval before it can begin trading.

The filing lists Jane Street, Virtu Americas and Macquarie Capital as authorized participants, allowing them to create or redeem large blocks of shares and profit from the arbitrage between Bitcoin’s price and the ETF’s share price. This keeps the ETF’s price close to the value of Bitcoin.

Morgan Stanley recommended a 2% to 4% allocation to crypto portfolios for investors and financial advisers in October 2025 and allowed its financial advisors to recommend crypto funds to clients with individual retirement accounts (IRAs) and 401(k)s.

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Morgan Stanley S-1 filing amendment. Source: SEC.gov

“Morgan Stanley is moving from distributing BlackRock’s IBIT to issuing its own product, capturing management fees directly rather than earning distribution commissions,” Marcin Kazmierczak, co-founder of RedStone, told Cointelegraph, adding that the bank’s 15,000 financial advisors will introduce a real “distribution muscle” for the ETF.

Related: Morgan Stanley, other top holders add Bitmine exposure amid sell-off

Wall Street moves closer to crypto funds

The move adds to a broader push by large US financial institutions to expand access to crypto-related products.

On Jan. 5, 2026, the second-largest US bank, Bank of America, began allowing advisers in its wealth management businesses to recommend exposure to four Bitcoin ETFs, which were previously only available upon request, Cointelegraph reported. 

A day earlier, Vanguard, the world’s second-largest asset manager, enabled crypto ETF trading for its clients, reversing its previous stance on digital asset ETFs.

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Related: Wells Fargo sees ‘YOLO’ trade driving $150B into Bitcoin and risk assets

BlackRock, the world’s largest asset management firm, recommended an up to 2% Bitcoin allocation to its clients in December 2024.

Magazine: Bitcoin’s ‘biggest bull catalyst’ would be Saylor’s liquidation — Santiment founder

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