Spotify Stock Gains on US Price Hike to Enhance Profitability

Spotify Stock

On Monday, Spotify (NYSE:SPOT) gained up to 4% during early trading after announcing plans for another round of price increases for its US subscription packages.

Starting in July, prices will increase by $1 to $3, the company said Monday. Family plans will see the biggest increase, going from $16.99 per month to $19.99. Duo plans, which are for two people who share an account, will increase by $2 to $16.99. And Spotify Premium subscriptions will now cost $11.99 per month, up $1.

The move follows Spotify’s adjustment of some subscription plans last summer, and the company said it needs to periodically update prices to continue investing in product features and innovations that will improve the user experience.

The decision to raise prices comes as Spotify reported a profitable first quarter, beating most of its key metrics and giving upbeat guidance for revenue and operating income growth in the current quarter.

Over the past year, Spotify has been raising prices, laying off workers and taking other steps to improve profitability. The company has said it is committed to investing in areas like the competitive podcast market, but it also wants to offer different subscription tiers to appeal to a wider range of users.

During Spotify’s first-quarter earnings call in April, CEO Daniel Ek said the company plans to introduce new subscription tiers to meet the needs of different customers. Ek said the company is focused on creating value, and that will allow it to raise prices.

Spotify shares have performed well over the past year, more than doubling in value and rising 64% so far in 2023.