Spotify Turns the Pricing Lever Again
A textbook revenue move
Spotify announced another round of U.S. price increases, leaning into a simple but powerful formula: higher prices, higher profits.
The new pricing structure includes:
- Individual Premium: $12.99 (up from $11.99)
- Duo Plan: $18.99 (up from $16.99)
- Family Plan: $21.99 (up from $19.99)
- Student Plan: $6.99 (up from $5.99)
With the move, Spotify now sits at the top of the pricing ladder among major streaming services — more expensive than Apple Music and Amazon Music.
That hasn’t stopped analysts from applauding the strategy.
The Math Behind the Upside
Why Wall Street likes the move
Evercore ISI analyst Mark Mahaney estimates the latest price hikes will drive a 4%–5% boost in revenue, assuming:
- About 65 million U.S. subscribers
- Roughly 45% on individual plans
- Around 44% on Duo or Family plans
Based on those assumptions, Mahaney projects:
- ~€842 million ($978M) in incremental revenue over three quarters of FY 2026
- Approximately $270 million in additional gross profit
- The majority of that uplift flowing directly to operating income
In short, this isn’t just revenue growth — it’s margin expansion.
Pricing Power Is the Story
Low churn, higher ARPU
According to Mahaney, Spotify’s ability to raise prices without meaningful subscriber fallout reinforces its long-term thesis:
- Global streaming leadership
- Expanding average revenue per user (ARPU)
- Strong retention across more than 150 markets
- Improving profitability profile
He also points to a potential catalyst ahead: a higher-priced “Superfan” or Premium+ tier, which could further lift ARPU into 2026.
Mahaney rates Spotify Outperform with a $750 price target, implying roughly 47% upside. That target sits above the current Wall Street average, with about 75% of covering analysts rating the stock Buy or Strong Buy.
A Familiar Pattern for Spotify Shares
Short-term doubt, long-term payoff
Spotify has raised prices before — most recently in June 2024 and again in July 2023, its first increase since launching in the U.S. in 2011.
Each time, the pattern has been similar:
- Initial investor hesitation
- Concerns about subscriber churn
- Followed by stronger earnings and sustained stock gains
So far, users haven’t tuned out — and Wall Street hasn’t either.
WSA Take
Spotify’s latest price hike isn’t about desperation — it’s about confidence. The company is proving it can monetize its scale, expand margins, and raise ARPU without breaking user loyalty. In a market where growth is harder to find, pricing power is king — and Spotify is playing that hand aggressively.
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Disclaimer
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