Spotify’s stock price soared as much as 4% in early trading on Monday following the company’s announcement of its latest round of price hikes for US subscription plans. The streaming giant’s decision to increase prices by $1 to $3, effective July, aims to boost profitability and invest in innovative product features.
The price hikes will affect various subscription plans, with the family plan experiencing the largest increase, rising to $19.99 per month from $16.99. Duo plans will increase by $2 to $16.99, while Spotify Premium subscriptions will now cost $11.99 per month, a $1 increase.
This move comes after Spotify reported a profit in the first quarter, beating most of its key metrics, and guided to higher revenue and operating income for the current quarter. The company has committed to price increases, layoffs, and other initiatives to improve profitability over the past year.
Spotify CEO Daniel Ek confirmed plans to offer various subscription tiers, including an audiobook-only tier and a music-only tier, to attract a broader user base. Ek emphasized the importance of creating value to justify price increases.
The company’s stock has surged over 100% in the past year and 64% year-to-date. This latest development signals Spotify’s continued efforts to prioritize profitability and growth.
What They’re Saying:
“We want to offer as much flexibility as possible… The more value we create, the more ability we will have to then capture some of that value by price increases.” – Daniel Ek, Spotify CEO
In Essence:
Spotify’s strategic price hikes aim to boost profitability and invest in innovative features, signaling the company’s commitment to growth and value creation.
