Spotify Technology’s (NYSE:SPOT) latest round of price hikes in Germany, Austria, and Switzerland, ranging from 8% to 22%, has sparked renewed optimism among investors, as the changes strengthen the company’s margins and enhance its long-term growth outlook.
The strategic adjustments, which target about 25% of its global premium subscriber base, are expected to boost gross margins, especially as non-music content like audiobooks and podcasts reduce royalty obligations. With similar increases likely in major markets like the U.S. by year-end, Spotify is poised for a significant financial impact in 2026.
The price moves have prompted a positive revision from Guggenheim analyst Michael Morris, who raised his price forecast to $850, up from $800, and reaffirmed his Buy rating. Morris projects these hikes will continue to enhance Spotify’s long-term growth trajectory.
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Morris reiterated his bullish stance on Spotify after announcing another round of price hikes across several European markets. Late last week, Spotify raised subscription costs in Germany, Austria, and Switzerland, with increases ranging from 8% to 22% depending on the plan. Morris estimated that these markets represent about 10% of Spotify’s premium subscriber base.
The updated pricing, 12.99 euros for Individual in Germany and Austria (up 18%) and 13.95 Swiss francs in Switzerland (up 8%), along with similar hikes for Duo, Family, and Student plans, mirrors prior adjustments in the U.S. and other regions where Spotify has expanded its offering beyond music.
According to Morris, these increases will be gross margin accretive, since a significant portion of the higher price is attributed to non-music services such as audiobooks and video podcasts, which lowers Spotify’s royalty obligations to music rights holders.
Earlier this month, Spotify lifted prices in various emerging and secondary markets. Those adjustments, which followed the company’s earnings release, largely impacted regions excluded from the sweeping third-quarter 2023 price cycle.
Combined, Morris estimated that the recent increases now cover about 25% of Spotify’s global premium subscriber base, which was not already affected by last year’s hikes.
He further projected that Spotify will introduce another round of pricing changes in its largest markets, including the U.S., before the end of 2025, with the financial impact to materialize in early 2026.
Considering industry dynamics, Morris highlighted that recent licensing agreements likely included increases in per-subscriber minimum fees.
These contractual shifts should accelerate retail pricing across the streaming audio industry, aligning subscription costs more closely with the value provided to consumers.
With ARPU (Average Revenue Per User) and premium gross margins trending upward, he views Spotify as structurally stronger than before and well-positioned to sustain profitability improvements.
Price Action: SPOT stock traded higher by 0.23% to $734.50 at last check Monday.
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