Morgan Stanley names Spotify one of its top picks. Here's why

Morgan Stanley reiterated an Overweight rating and named Spotify (SPOT) a 'Top Pick,' setting an $800 price target that implies 18% upside, driven by expectations of accelerated user growth from a new pricing cycle for both free and premium tiers. This bullish sentiment, shared by a majority of analysts, saw Spotify shares rise 3.2% in early trading, despite a recent 8% monthly decline.

Analysis

Morgan Stanley has designated Spotify (SPOT) as a "Top Pick" and reiterated an Overweight rating, setting a 12-month price target of $800, implying an 18% upside. This bullish stance is predicated on an anticipated acceleration of growth into next year, driven by a new pricing cycle for both free and premium tiers. Following this announcement, Spotify shares rose 3.2% in early Nasdaq trading.

Analyst Benjamin Swinburne highlights significant value additions to Spotify's offerings, which are expected to court more users and fuel this growth. This positive outlook aligns with broader Wall Street sentiment, as 28 out of 41 analysts covering the stock rate it a buy or strong buy. The consensus reinforces Morgan Stanley's high-conviction idea.

Despite a recent 8% decline over the past month, Spotify's stock has demonstrated strong year-to-date performance, soaring 51% in 2025. The analyst upgrade and positive sentiment suggest a potential reversal of recent short-term weakness, positioning SPOT for continued upward momentum based on fundamental improvements and strategic pricing.

Key Decisions for Investors

• Investors should evaluate Spotify's potential for accelerated user growth and revenue expansion, driven by the new pricing cycle and enhanced tier value, as highlighted by Morgan Stanley's "Top Pick" designation.
• Consider the strong analyst consensus, with 28 of 41 analysts rating SPOT a buy or strong buy, which provides robust support for the stock's positive outlook despite recent short-term volatility.
• Monitor execution of the new pricing strategy and user acquisition metrics in upcoming quarters to validate the projected 18% upside to Morgan Stanley's $800 price target.