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
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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