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Spotify Stock Rises 8% on Plans to Raise Subscription Prices

Spotify - ★★★★ – Ranked #37 in Q2 2024 Large Cap Rankings

Shares of Spotify (SPOT) jumped 8% today after reports that the streaming giant plans to increase subscription prices in several markets, including the U.S. later this year. The price hikes signal Spotify's efforts to boost profitability after years of losses from aggressively pursuing growth.

According to people familiar with the matter, Spotify will raise prices by $1 to $2 in the U.K., Australia, Pakistan, Sri Lanka and Ghana this month. Price increases are expected to follow in the U.S. market later in 2024.

This latest round of price increases is seen as a move to help cover the costs of Spotify's expansion into audiobooks. The company began offering 15 hours of free audiobook listening to some subscribers last year, including in the U.S. where an individual subscription costs $10.99 per month.

While Spotify saw a strong response from users paying an additional $12.99 for 10 more hours of audiobook access, the company now aims to collect more revenue to pay publishers and authors. Spotify plans to introduce a new $10.99 tier in the U.S. that excludes audiobooks.

Spotify has a goal to get to profitability in the near term. Executives have emphasized the company's transformation from a music streaming service into a broader "audio" company with podcasts and audiobooks complementing music.

This marks Spotify's second major price increase after it raised the cost of its most popular U.S. plan by $1 last year to $10.99 per month. More price hikes are expected across the company's various plans and markets as it pursues sustainable profitability.

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