Spotify (SPOT) Pulls No. 1 Song After Suspicious Kalshi Betting Activity

Spotify Technology S.A. (NYSE:SPOT) pulled streams of a chart topping song this week after detecting what it called manipulated activity tied to bets on the prediction market Kalshi, adding a fresh wrinkle to the stock's story.

The track in question, "Earrings" by musician Malcolm Todd, jumped 70% overnight Sunday and briefly claimed the top spot on Spotify's U.S. streaming chart, according to reporting from the Financial Times. By Wednesday, Spotify had removed the streams, saying it did not believe the surge came from genuine listeners.

What Spotify Says Happened

A Spotify spokesperson told CBS News that the platform faces constant attempts at stream manipulation and that it has built detection systems specifically to catch and block them. The company said royalties tied to manipulated streams are not paid out, a policy meant to remove the financial incentive for gaming its charts. A Kalshi spokesperson said the prediction market operator is in contact with Spotify and looking into the episode itself.

Prediction Markets Under a Brighter Spotlight

The song controversy lands amid broader unease over whether platforms like Kalshi and Polymarket have built strong enough guardrails against manipulation or insider trading on nonpublic information. Skeptics argue that anyone with early knowledge of an event, or the power to shape its outcome, could quietly profit by betting ahead of the crowd. That worry surfaced in January, when a well timed wager on the capture of Venezuelan leader Nicolás Maduro drew scrutiny. A U.S. special forces soldier tied to the operation that led to Maduro's capture has since pleaded not guilty to charges that he used classified mission details to place that bet. The Commodity Futures Trading Commission oversees prediction markets, an industry that has pulled in billions of dollars in venture funding even as questions about its integrity persist.

Spotify Valuation, Momentum and Yield

Shares of Spotify closed at 485.97 dollars, up 2.86% on the day, giving the company a market capitalization of 99.93 billion dollars. The stock sits well within its 52 week range of 411.24 to 541.99 dollars, closer to the middle than either extreme, and its Relative Strength Index of 55.74 suggests neither overbought nor oversold conditions. Spotify pays no dividend, so any return to shareholders currently rests entirely on price appreciation rather than income.

The bull case centers on Spotify's growing subscriber base and its expanding advertising and podcasting businesses, which have helped push margins higher over the past year. Investors betting on continued gains point to the company's ability to raise prices without losing meaningful listener share. The bear case leans on valuation concerns tied to the company's premium relative to earnings, along with the reputational risk that comes from repeated stream manipulation incidents, which could erode trust in its charts and royalty payouts if left unchecked. Regulatory attention on prediction markets adds another layer of uncertainty that touches the broader ecosystem Spotify now finds itself entangled in, even if only tangentially through this single song.

Where the Kalshi Investigation Goes Next

Kalshi has not disclosed the size or nature of the suspicious bets tied to "Earrings," and it remains unclear whether any traders profited before Spotify intervened. The CFTC has not commented publicly on this specific case, leaving open the question of whether federal regulators will examine the episode alongside their broader review of prediction market safeguards.