(P1) Pomerantz LLP announced on May 7, 2026, it is investigating claims on behalf of Spotify Technology S.A. (NYSE: SPOT) investors, centering on potential securities fraud and other unlawful business practices.
(P2) "The investigation concerns whether Spotify and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices," the law firm stated in a press release.
(P3) The probe follows Spotify's first-quarter 2026 financial results, where the company projected second-quarter premium subscribers would only reach 299 million, missing estimates of 300.3 million. The company also reported lower-than-expected ad revenues, leading to a $61.62, or 12.43%, drop in its stock price to $434.20 per share on April 28, 2026. Another law firm, Bronstein, Gewirtz & Grossman, LLC, is also investigating potential claims on behalf of Spotify purchasers.
(P4) These investigations expose Spotify to significant legal and financial risk, potentially leading to class-action lawsuits, litigation costs, and damages. The news adds to the legal pressures facing the company, which recently saw a lawsuit alleging illegal payola and stream boosting dismissed.
A lawsuit filed by Genevieve Capolongo, which claimed Spotify's 'Discovery Mode' was a form of illegal payola, was dismissed with prejudice. The judge pointed to an arbitration agreement signed by Capolongo, waiving her right to sue. Another lawsuit from last November, brought by Eric Dwayne Collins (RBX), also cited alleged streaming fraud, which Spotify has consistently denied.
"Spotify in no way benefits from the industry-wide challenge of artificial streaming," a company spokesperson said in response to the earlier lawsuit. "We heavily invest in always-improving, best-in-class systems to combat it and safeguard artist payouts."
Despite the legal challenges, Wall Street remains broadly positive on Spotify, with six firms issuing buy ratings in recent months and a median analyst price target of $600. However, insider sentiment appears more cautious, with Co-CEOs Gustav Soderstrom and Alex Norstrom selling a combined total of over $12 million in stock in the last six months.
The ongoing investigations create a new layer of uncertainty for investors. The outcome of these probes could have a material impact on Spotify's financial position and stock performance. Investors will be closely watching for any further developments, including the potential filing of a class-action lawsuit.
