Spotify (NYSE:SPOT) shares have rallied by nearly 114% over the past year, and it looks like further gains are in store for investors in the company. The audio streaming major is planning another price hike, the second time in a year, as it seeks long-term profitability. Additionally, its first-quarter results are coming up later this month.
Spotify Price Hikes
According to Bloomberg, Spotify plans to increase prices in major markets, including the U.K., Australia, and Pakistan this month. A price increase in the U.S. is expected later this year. Further plans include a new basic tier for music and podcasts for the current individual premium plan. However, users of the plan will have to pay for audiobooks.
The move is seen as part of multiple new pricing plans on the horizon from Spotify. Reportedly, the company is also working on another plan that will include higher pricing for better audio quality.
Spotify’s Quest for Profits
While Spotify has been able to consistently increase its revenue, the company is yet to churn out any annual profits. The price increases could help Spotify reach profitability, as was evident in its Q4 numbers when benefits from pricing gains resulted in 16% higher revenue and a narrower net loss. Its total monthly active users (MAUs) increased by 23% to 602 million for the quarter.
Investors will be looking for a similar performance on April 23 when Spotify is slated to report its Q1 results. Analysts expect the company to post an EPS of $0.74 on revenue of $3.89 billion for the quarter. In the comparable year-ago period, Spotify’s EPS of -1.25 had missed estimates by $0.32.
Is SPOT a Good Stock to Buy?
Overall, the Street has a Strong Buy consensus rating on Spotify alongside an average SPOT price target of $271.76.
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