Spotify stock rises as Wolfe Research reiterates Outperform rating

Investing.com - Spotify (NYSE:SPOT) stock gained momentum after Wolfe Research reiterated its Outperform rating and $790.00 price target on the streaming platform. The stock has delivered impressive returns with a 40% gain year-to-date and nearly 90% over the past year, according to InvestingPro data.

The company confirmed it will raise prices on Premium plans beginning with the September billing cycle, with increases affecting countries across Europe, Middle East, Africa, Latin America, South Asia, and Asia-Pacific regions. The price hikes range from 9% for Individual plans to 16.7% for Family plans. With revenue growing at 14.8% over the last twelve months and a strong financial health score from InvestingPro, the company appears well-positioned to implement these changes.

Wolfe Research noted that while certain countries like Benelux and France have already implemented these increases, the price changes could hypothetically provide up to 2.3% organic uplift to 2025 Premium ARPU, potentially translating to a 6.8% benefit over 12 months.

The research firm acknowledged churn remains a risk but pointed out that past price increases have resulted in low customer turnover. Spotify had previously indicated on its second-quarter earnings call that it expected flat premium ARPU year-over-year organically in the third quarter.

Wolfe Research views this pricing strategy as Spotify "strategically messaging the consumer first" and believes it sets up better performance in the second half of 2025 into 2026, even before considering potential incremental monetization from a future superfan tier.

In other recent news, Spotify Technology SA announced plans to increase Premium subscription prices in various international markets, including South Asia, the Middle East, Africa, Europe, Latin America, and the Asia-Pacific region. This move comes as Spotify aims to boost its revenue from its subscription services. Following the announcement, KeyBanc adjusted its price target for Spotify to $830, maintaining an Overweight rating, highlighting the company’s strong monthly active user and Premium Subscriber growth. Meanwhile, Bernstein reiterated its Outperform rating with an $840 price target, viewing the recent stock pullback as a favorable entry point for investors. Benchmark also lowered its price target to $800 due to concerns about Average Revenue Per User (ARPU) and advertising results. Cantor Fitzgerald maintained a Neutral rating and a $640 price target after Spotify’s second-quarter earnings report revealed revenues and operating income below expectations, impacted by foreign exchange headwinds and social charges. These developments reflect a mixed sentiment among analysts regarding Spotify’s financial performance and future prospects.

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