Spotify stock price has done well over time, and is nearing its all-time high as investors wait for its financial results on Tuesday. SPOT, the market leader in music streaming, jumped to a high of $620 on Friday, its highest level since February 20, and a few points below its all-time high of $652. This article explores whether the Spotify share price has more upside going forward.
Spotify to hike prices in key markets
The Spotify stock price jumped on Friday after the Financial Times reported that the company was considering raising prices for its subscriptions as it focuses on profitability.
The paper noted that prices will rose by about $1 or 1 euro in international markets, excluding the United States, its biggest market.
Spotify has already started hiking prices in countries like Luxembourg and the Netherlands. Most price increases will happen in the summer months.
These price increases are in line with what most music executives have been calling in the past few years. They have argued that streaming companies like Spotify and Apple Music should do more to hike their prices.
The argument is that these streaming solutions are still cheaper than companies like Netflix and MAX. Also, they argue that these companies’ prices increases have been slower than inflation. For example, Spotify launched in the US with a price of $9.9 in 2011, an amount that stands at $11.99. In this period, US inflation has jumped by over 43%.
Spotify is also considering creating a top tier in the US that will cost $6 extra of its most advanced tier.
The company hopes that these price increases will help it to boost its revenues and profits over time. Even a $1 dollar increase can lead to substantially higher numbers since it has over 252 million users globally.
The company is betting that these price increases will not lead to subscriber losses. That’s because other companies like Tidal and Apple Music will react to these prices by rising theirs. Also, it is highly unlikely that many Spotify users will opt for other solutions since they see its services as being superior.
Read more: Why Spotify (SPOT) could be a safe bet in an economic slowdown
SPOT earnings ahead
The next important catalyst for the Spotify stock price is its upcoming corporate earnings scheduled on Tuesday.
The most recent numbers showed that the company had over 675 million monthly active users, a 12% increase from the same period last year. Its premium subscribers jumped by 11% to 263 million.
These numbers pushed its quarterly subscription revenues up to €3.7 billion and its ad-supported figure to €537 million. This brought its total revenue up to €4.2 billion, and operation margin to 11.2%.
Wall Street analysts expect Spotify’s earnings to show that its sales rose by 15.5% in the quarter to €4.2 billion. Its guidance for the current quarter will be €4.37 billion, while the annual forecast will be €18 billion, a 15% annual increase.
A key risk that could impact Spotify’s earnings is the euro, which has strengthened against the US dollar. A stronger greenback impacts its earnings, as it generates most of its revenue in the United States.
Read more: Why Netflix may emerge as a trade war survivor
Spotify stock price technical analysis
The eight-hour chart shows that the SPOT share price has bounced back after bottoming at $484 earlier this month. It has risen to $620, its highest level since January.
Spotify stock price has formed a W chart pattern, commonly known as a double-bottom. This is a popular bullish reversal sign in technical analysis. It is now moving above the neckline at $625, the highest point on March 24.
The stock has moved above the 50-day moving average, a sign that bulls are in control. Therefore, the most likely scenario is where it rallies and hits its all-time high at $652 after earnings.
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