When it comes to network effects, the competitive advantage understandably goes to the company with the biggest network. Amazon in e-commerce, Meta in social media, Google and Apple in app stores. In the audio streaming industry, with its more than 750 million users and counting, there is no-one bigger than Spotify.
The company’s valuation has also reflected its dominant position in recent years. Currently above $480 per share, the stock is up seven-fold from its 2022 bottom just under $70. On the other hand, it is down 38% from its all-time high of $785 reached in the summer of 2025. The question is, should investors view this decline as a buying opportunity or wait for the price to drop even further?
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The first thing to notice on the chart above is that the surge from $69 to $785 is a five-wave impulse. We’ve marked the pattern (1)-(2)-(3)-(4)-(5), where the five sub-waves of wave (3) are also visible. Impulses only develop in the direction of the larger trend, which tells us that Spotify remains attractive in the long-term.
Unfortunately, the not-so-distant future is not that easy to decipher. A three-wave correction follows every impulse, before the preceding trend can resume. In Spotify’s case, the decline from $785 to $405 can already be seen as a three-wave structure. But is it a complete a-b-c zigzag correction or just the first three waves of wave (a) of a bigger retracement? Hard to tell.
When faced with such unclear situations, the Elliott Wave analyst has to simply keep both possibilities in mind and try to identify a key level to separate them. When it comes to Spotify, that level is $571. As long as the stock trades below it, we can expect more weakness in wave 5 of (a), followed by waves (b) up and (c) down to the 61.8% Fibonacci support. A rise above it, on the other hand, would most likely mean that wave 5 of (a) is not going to take place, since wave 4 is already big enough.
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