Is Spotify Technology (SPOT) Still Undervalued As Its Buyback Plan Grows?

Spotify Technology (NYSE:SPOT) drew fresh attention on 20 August 2026 after lifting its equity buyback authorization by an additional US$1.5b, prompting investors to reassess how management is thinking about capital allocation.

Spotify Technology's latest buyback move comes after a choppy year for the stock, with a 1 month share price return of 9.52% and a 3 month share price return of 7.83%. However, there has been a year to date share price decline of 4.78% and a 1 year total shareholder return decline of 19.71%. At the same time, the 3 year total shareholder return of 247.49% and 5 year total shareholder return of 119.85% point to a much stronger longer term journey that investors are now weighing against recent streaming growth data and the latest signal from management on capital priorities.

Scan how Spotify's renewed buyback focus compares with other platforms by reviewing the hand picked 19 high quality undiscovered gems in digital media and entertainment.

So after a fresh US$1.5b buyback boost and a mixed share price track record, does Spotify Technology still offer a skewed payoff for new buyers, or has the recent run already captured most of the upside on offer?

Most Popular Narrative: 9.7% Undervalued

Spotify Technology's most followed narrative pegs fair value at $606, compared with the latest close at $547.51, which frames the recent buyback decision in a valuation context that many investors are now watching closely.

Ongoing product innovation and diversification into fast-growing verticals, such as podcasts, video, and audiobooks, expands revenue per user, supports higher ARPU, and improves operating leverage, especially as these formats experience exponential engagement increases (e.g., video podcasts up 20x vs. audio).

Read the complete narrative.

Want to see what kind of revenue mix sits behind that fair value gap. The narrative leans heavily on stronger margins, richer ARPU and a future earnings profile that assumes Spotify Technology can compound both subscription and add on monetization far beyond where they are today.

Result: Fair Value of $606 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Spotify Technology still faces real pressure from high music licensing costs and uncertain podcast profitability, which could limit the margin progress that underpins this 9.7% gap.

Find out about the key risks to this Spotify Technology narrative.

Another View On Spotify Technology's Valuation

The community narrative leans on fair value of $606 using earnings and growth assumptions. Our DCF model points in a different direction. On those cash flow projections, Spotify Technology screens as undervalued with a future cash flow value of $702.02. Which reference point do you treat as your anchor?

Look into how the SWS DCF model arrives at its fair value.

Next Steps

With mixed signals on valuation, risk and reward, it helps to move quickly and test the assumptions yourself using the 3 key rewards and 1 important warning sign.

Looking For More Investment Ideas Beyond Spotify Technology?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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