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About 90% of Spotify’s revenue is generated through its growing base of paid subscribers, which is increasing at double-digit rates.
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Thanks to rising revenues, shares of Roblox have surged more than 75% since the beginning of this year.
Despite facing declines of over 10% earlier in the year, major stock market indexes are starting to climb again. As of now, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are 2% to 6% below their all-time highs.
With that context, it’s worth considering which emerging growth stocks to focus on these days.
First up is Spotify Technology (NYSE: Spot). As of now, Spotify’s shares have risen over 58% year-to-date, nearing their previous record highs. It’s regarded as a breakout growth stock, largely due to impressive revenue performance in its first quarter.
One compelling reason to look at Spotify now is its ongoing improvement in key performance metrics. In the first quarter, monthly active users grew by 10% year-on-year, while premium subscribers also increased by 12% to reach 268 million. It’s important to note, however, that this growth follows a long-term trajectory that has been in motion for several years, suggesting consistent business expansion without any slowdown in revenue.
In fact, Spotify’s monthly active users have increased around tenfold over the last decade—from 68 million to 678 million.
While many Spotify users are familiar with its ad-supported membership options, the company is working to convert as many of these individuals into paid subscribers as possible. Since paid users contribute roughly 90% of Spotify’s revenue, expanding the paid user base is crucial for sustained financial growth.
Wall Street is taking notice as Spotify’s user growth exceeds expectations. Recently, investment bank Jeffries increased its price target for Spotify from $730 to $845, attributing this shift to better-than-expected user growth, especially in emerging markets. They also noted that a higher ad rate could further benefit Spotify’s stock. Additionally, potential cost-cutting measures could enhance profit margins.
Moreover, Spotify’s advancements in Artificial Intelligence (AI) present another reason for investors to consider the stock. The company has been developing features like AI DJs, natural language search capabilities, and AI-generated playlists. These innovations enhance user experience and boost overall engagement.
For growth-oriented investors, now might be the right moment to consider Spotify. Utilizing a dollar-cost averaging strategy could lessen the pressure of finding the perfect time to invest.
Next on the list is Roblox (NYSE: RBLX), which has become one of the standout stocks of the year, with an annual increase of 78%.
So, what’s driving the recent surge in Roblox’s stock? It largely comes down to improvements in the company’s fundamentals.
In the first quarter, Roblox reported a smaller-than-expected loss of $0.33 per share, surpassing analyst forecasts that projected a loss of $0.45 per share.
While the net loss is still a loss—and Roblox has struggled to achieve quarterly profitability since 2021—profits aren’t necessarily the main focus for growth stocks during their early stages. What matters more is that the company continues to expand and maintain a healthy balance sheet to support its operations.
On that front, Roblox is solid. The company holds $2.7 billion in cash against $1.8 billion in debt. Moreover, it has generated about $1 billion in free cash flow over the past year, indicating it’s not facing any cash flow issues.
In terms of growth, revenue has risen 29% year-on-year, and bookings—money spent on Robux, Roblox’s in-game currency—has increased by 31%.
Additionally, the company has announced that its payments to creators exceeded $281 million in this past quarter, putting them on track to exceed $1 billion for the entire year. These creator payments are vital for attracting future game developers, as they demonstrate that Roblox compensates developers handsomely.
So, is now a good time to buy Roblox stock? Investors with a long-term growth outlook may want to jump in, especially given the company’s rising revenue and free cash flow metrics.
That said, Roblox isn’t for everyone. Its lack of profitability might make it unsuitable for certain investors or portfolios. However, for those looking for growth, it could definitely be a stock to keep in mind.
There’s something to consider before buying into Roblox, though.
The analyst team from Motley Fool Stock Advisor has pointed to what they believe are the ten best stocks to buy right now—and Roblox isn’t among them. The chosen stocks are expected to deliver high returns in the coming years.
It’s interesting to note that if you invested $1,000 in Netflix when it was first recommended back in December 2004, it would be worth about $658,297 today! Or, investing in Nvidia when it was first mentioned in April 2005 would yield approximately $883,386 now.
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*Stock Advisor returns are as of June 9, 2025.
Jake Larch has positions in both Roblox and Spotify Technology, as recommended by Motley Fool.
For further insights, consider checking out other articles related to growth stocks.
