Spotify Technology (SPOT) saw its stock price rise by 5% on Monday after announcing plans to increase the price of its premium subscription service in several international markets.
The company said it will raise prices across Europe, the Middle East, Africa, Latin America, South Asia, and the Asia-Pacific region.
In Europe, for example, the monthly individual subscription will increase from 10.99 euros to 11.99 euros (about $13.89).
Analysts expected the price hike as Spotify aims to boost profit margins. Experts say Spotify has strong pricing power and can raise subscription fees without losing many customers.
After the announcement, Spotify’s stock closed at 658.59, up 5% for the day.
Last week, Spotify’s stock dropped after the company reported a surprise loss and weaker-than-expected sales in the second quarter. Spotify also gave a cautious revenue outlook for the current quarter.
Spotify ended June with 276 million subscribers worldwide.
Ian Moore, an analyst at Bernstein, said, “Ten years of pent-up pricing power and minimal churn on past price hikes continue to give us confidence in our average revenue per user (ARPU) growth beyond Q3.” He rates Spotify stock as outperform with a price target of 840.
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