Citizens analyst Matthew Condon lowered the price target on Spotify (NYSE: SPOT) to $600.00 (from $800.00) while maintaining a Market Outperform rating.

The analyst commented, "Spotify reported strong 1Q26 results, but operating income guidance disappointed as the company accelerates investment in compute and AI—investments we view as offensive and key drivers of future growth. 2Q26 gross margin guidance of 33.1% was in line with consensus but below the bull expectation of 33.5%, while operating income guidance of €630M came in 8% below consensus of €680M. With Spotify’s stock historically tracking closely to EBITDA estimate revisions, the post-earnings release pullback in shares is understandable, but we view these investments as deliberate and growth-oriented rather than a defensive reaction to competitive pressure, and we do not believe AI platforms are meaningfully impacting engagement. Importantly, recently launched products and features are generating strong early engagement signals, pointing to improving retention and long-term LTV creation, validating their investments. While it will take time for these investments to manifest in top-line trends, we believe Spotify is leaning into its structural advantages as a multi-vertical platform—spanning music, podcasts, video podcasts, and audiobooks—that engages 750M+ MAUs, and has assembled a vast proprietary listening dataset enabling it to create differentiated and personalized experiences. Given these structural advantages, our confidence in the long-term growth trajectory, and shares trading at a historically low multiple (see Figure 1), we reiterate our Market Outperform rating, though we lower our price target to $600 from $800 prior, given the near-term impact of investments on profitability. "