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Spotify (NYSE: SPOT) stock was trending lower on Tuesday, down about 5% to roughly $692 per share. The catalyst was a major shakeup at the music streamer as founder and CEO Daniel Ek announced that he was stepping down as CEO.

Ek revolutionized music streaming when he founded Spotify in Stockholm in 2006. The company shifted the model from buying music – either digitally or CDs – to streaming music for a subscription or for free with an ad-supported tier.

His decision to resign as CEO came as a surprise to the market and investors, as there had been no prior indication. Markets acted accordingly, sparking a selloff, although it is likely more kneejerk than anything else.

“But I’m incredibly proud of what we’ve created together—a beloved user experience, a business that thrives, and a team that continues to raise the bar,” Ek wrote in a note to employees on September 30. “A huge amount of credit goes to Alex and Gustav, who have led with skill, vision and conviction. They have proven themselves again and again, and I believe they are ready for what’s next. So, with full confidence in Gustav and Alex, on January 1, 2026, I will move to Executive Chairman, and Gustav and Alex will become our co-CEOs and they will also join our Board of Directors.”

The new co-CEOs are Alex Norström and Gustav Söderström, who were promoted from co-presidents.

Business as usual?

While it is a major change, in reality, not all that much is really changing. Both Norström and Söderström have been essentially serving as co-CEOs since 2023, and the stock price has surged since then. Over the past three years, Spotify has posted an average annualized return of 99%. The stock is up 50% year-to-date and 86% over the past 12 months.

Over the last few years, I’ve turned over a large part of the day-to-day management and strategic direction of Spotify to Alex and Gustav — who have shaped the company from our earliest days and are now more than ready to guide our next phase,” Ek said. “This change simply matches titles to how we already operate. In my role as Executive Chairman, I will focus on the long arc of the company and keep the Board and our co-CEOs deeply connected through my engagement.”

Analysts see continued growth for Spotify, as it has a median price target of $771 per share, which suggests 11% upside over the next 12 months.

While he will serve as executive chairman at Spotify, Ek said he will also work to create more “supercompanies” out of Europe – “companies that are developing new technologies to tackle some of the biggest challenges of our time.” Ek said there will be more details on that initiative to come.

The selloff on Tuesday could be a good opportunity for investors, as Spotify stock already has a super-high P/E ratio of 158 and a forward P/E of 52.

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