Spotify (NYSE:SPOT) is leaning on global price hikes, new label deals, and product upgrades to boost revenue, expand margins, and drive long-term growth.
With strong subscriber momentum and fresh content offerings, Spotify is positioning itself for steady revenue acceleration and profitability gains through 2026.
JP Morgan analyst Doug Anmuth maintained a Spotify rating of Overweight and raised the price forecast from $740 to $805.
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Anmuth raised his outlook on Spotify, citing pricing power, new label agreements, and product enhancements as key drivers of long-term growth.
The analyst adjusted estimates to reflect recent international price increases, foreign exchange impacts, social charges, and other factors, while lifting his price forecast based on 2027 free cash flow projections.
Spotify raised prices in more than 100 countries in August, covering roughly 25% to 30% of premium subscription revenue, he noted.
Anmuth estimated that these hikes could generate approximately 380 million euros in annualized revenue and forecast foreign-exchange-neutral ARPU growth of 0.5% in the third quarter, 2% in the fourth quarter, and 4.6% in 2026, up from 2.3% in 2025.
The analyst argued that churn should remain limited, given Spotify’s scale, depth of content, and personalization features, and stated that a U.S. price increase by late 2025 or early 2026 could provide further upside.
On the label front, Spotify signed multi-year agreements with Sony covering recorded music and publishing, adding to earlier deals with Universal and Warner, he said.
Anmuth viewed these deals as a step toward launching a “Superfan Tier,” particularly after the rollout of lossless audio to premium subscribers in more than 50 markets.
The analyst also pointed to new product features in the free tier, such as expanded on-demand capabilities, personalized playlists, and in-app messaging, as tools that should deepen engagement, grow MAUs, and drive premium conversions.
He projected steady multi-year margin expansion despite near-term volatility from growth investments.
Anmuth expects gross margins to reach 32.8% in 2026, up 115 basis points, with operating income margins of 13.9% and free cash flow of 3.5 billion euros, a 19% increase.
The analyst credited revenue contributions from audiobooks, Marketplace, and advertising for supporting this trend and noted that Spotify has doubled its share buyback authorization, leaving $1.9 billion available.
Overall, Anmuth turned incrementally more positive on Spotify’s outlook, forecasting 2026 revenue growth of 14.1% year over year in constant currency, driven by a 9% increase in premium subscribers and higher ARPU.
SPOT Price Action: Spotify Technology shares were down 5.40% at $689.36 at last check on Tuesday.
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