Spotify announced a new subscription price hike. Does the stock have upside potential?

Spotify plans to raise subscription prices again, attributing it to the launch of new services and the development of the platform. The company is aiming for 1 billion users worldwide. Spotify shares remain volatile: their price has more than doubled over the year and added about 10% more after the last announcement of the tariff increase in early August. Analysts believe the stock is slightly undervalued, but warn of the risks of competition and slowing growth.

Streaming service Spotify has reiterated plans to raise subscription prices in the near future, the Financial Times reports. In early August, the Swedish company had already announced that from September it would raise the monthly cost of individual premium subscriptions in a number of countries to improve margins.

Spotify co-chairman and chief business officer Alex Norström said in an interview with the FT that the price adjustments are "part of the business toolkit" of the company. Each increase will be accompanied by the addition of new services and features, he said.

Spotify is now actively developing podcasts, audiobooks, testing an AI-DJ (AI-powered personalized audio DJ) feature and preparing a new tariff for "super fans" of artists.

"We will continue to add value to the product for users. Ultimately, it is the consumer who must win," Norström emphasized.

Spotify only started raising prices two years ago, the FT notes. The move has allowed the company to focus on profitability for the first time in a long time: it has reached annual profits in 2024, helped by both rate hikes and cost cuts.

Despite rising subscription costs, the user base continues to grow. Over the past year, the number of premium subscribers grew by 12% to 276 million, while the total monthly audience grew by 11% to 696 million. At the same time, just over 3% of the world's population subscribes to premium access, Norström said.

At the same time, the company reported a net loss in the second quarter of 2025, which CEO Daniel Ek attributed to "execution errors." Going forward, Spotify is focusing on margin growth and user engagement, and has set an ambitious goal of reaching 1 billion users worldwide.

According to Simply Wall St, Spotify securities remain volatile: they more than doubled over the past year, after which the quotes rolled back a bit, but the long-term chart still points to an uptrend. After the last announcement of the subscription price increase, the service's securities rose in price by almost 10%.

An analyst at Oppenheimer, whose position is cited by TipRanks, believes Spotify shares remain undervalued. In mid-August, he estimated their fair value at $825 with a current price of about $695. The analyst is confident in Spotify's ability to maintain its market leadership and drive growth by raising prices and expanding its subscription base.

Over the past five years, since August 2020, Spotify shares have appreciated 192%, which equates to a compound annual growth rate (CAGR) of 24%, says Motley Fool analyst Jake Lerch. By comparison, the S&P 500 index is up 91% (CAGR 14%) over the same period. This result is explained by two factors: the boom in the streaming market and tight cost control in Spotify, the expert specifies.

Lerch suggests that under a conservative scenario - a CAGR of 18% over the next five years - Spotify's stock could rise about 129% to around $1670. However, he cautions that the forecast depends on the company's ability to maintain audience growth, keep costs down, and withstand competition.

This article was AI-translated and verified by a human editor