Spotify’s Margin Expansion Sustains Bullish Thesis Despite Mixed Q3 Results
Spotify's 60% year-to-date rally hit a speed bump after Q3 earnings, with tech sector profit-taking and ad revenue concerns driving the pullback. The market's reaction appears overblown—ARPU weakness stems from strategic reclassification rather than structural issues.
The Core bullish narrative remains intact: Spotify's transformation from low-margin music distributor to multi-platform audio service continues unlocking value. Margin expansion, the linchpin of the platform transition thesis, shows no signs of deterioration.
While near-term volatility persists in tech stocks, Spotify's long-term growth trajectory justifies maintaining buy ratings. The company's ability to monetize its ecosystem outweighs transient metric fluctuations.