Spotify announced this week that it will increase the price of its individual Premium subscription in the U.S. from $11.99 to $12.99 per month; the Duo plan will rise from $16.99 to $18.99 per month; the Family plan will go from $19.99 to $21.99 per month; and the Student plan will also increase from $5.99 to $6.99 per month.
This move places Spotify in an awkward position—it now becomes the most expensive music streaming platform compared to Apple Music and Amazon Music.
According to calculations by Evercore ISI technology analyst Mark Mahaney, this price increase will generate substantial revenue gains.
Mahaney estimates that if the individual and student plans each increase by $1, and the duo and family plans each increase by $2, the company's revenue will rise by 4% to 5%. Assuming the gross margin remains consistent with current business levels, Mahaney calculates that the company's gross profit will increase by approximately $270 million, "the majority of which should translate into operating profit."
The core modeling assumptions he used are as follows: The number of subscribers in the U.S. region has reached 65 million. Of these 65 million users, approximately 45% are subscribed to the individual plan, and 44% are subscribed to the duo/family plans.
Mahaney calculates that for the first three quarters of fiscal year 2026, the price adjustment is expected to bring Spotify a total of €842 million (equivalent to $978 million) in incremental revenue.
Mahaney added, "We continue to view Spotify as the global leader in audio streaming, with the company achieving accelerating monetization capabilities, steady user growth, and continuous improvement in profitability. Supported by synchronized price increases in over 150 global markets and stable user retention rates, the growth in Average Revenue Per User has fully commenced, a trend that confirms Spotify's pricing power and low churn rate. We expect the full benefits of the price increase to gradually materialize in early 2026, coinciding with the company's planned launch of higher-priced Superfan/Premium Plus tier plans."
Mahaney maintains an Outperform rating on Spotify with a price target of $750, implying a potential 47% upside from the current stock price. According to data from Yahoo Finance, Mahaney's price target for Spotify is higher than the Wall Street average target price of $730. Among the 41 sell-side analysts covering Spotify, 75% rate the stock as a Buy or Strong Buy.
Spotify is no stranger to raising prices for its users.
The company's last price hike for U.S. subscribers was in June 2024, which was preceded by another increase in July 2023—its first price adjustment since launching in the U.S. market in 2011.
It is noteworthy that following each price hike announcement, Spotify's stock price has typically experienced sideways movement or a slight decline, as Wall Street worries that increased monthly fees could impact user numbers. However, as the positive effects on the company's revenue and profits gradually become apparent, and user churn remains limited, its stock price has subsequently stabilized and rallied, embarking on a strong upward trend.
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