Earnings Results: As Spotify stock sinks, CEO suggests raising prices for U.S. subscribers

by | Oct 25, 2022 | Stock Market

Spotify Technology S.A. Chief Executive Daniel Ek on Tuesday floated the possibility of raising prices in the U.S., after the music-streaming service forecast weaker margins following a slowdown in advertising growth. Ek, during the company’s earnings conference call, said he believed Spotify
SPOT,
+2.52%
had “significant pricing power,” thanks in part to lower churn than rivals, such as Apple Music, which recently raised its own streaming prices.

“Again, in specific, mostly to the U.S.-based price increases, it is one of the things that we would like to do, and this is a conversation we will have, in light of these recent developments, with our label partners,” he said. But shares took a hit after the company’s forecast and a bigger-than-expected third-quarter loss. The Luxembourg-based company reported a third-quarter net loss of 166 million euros ($165.5 million), or 99 euro cents per share, compared to a profit of 2 million euros, but a 41-cent per share loss, in the prior-year quarter. Sales came in at 3.036 billion euros, or $3.03 billion, compared to 2.501 billion euros in the year-earlier period. Gross margin came in at 24.7%. “Gross margin came in below expectations, mainly due to anunfavorable adjustment to prior-period estimates for rights-holder liabilities,” Spotify executives said in the company’s earnings materials. “We also saw a margin i …

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