Spotify Shares Plunge 4.98% Over Two Days as Third U.S. Price Hike Sparks Investor Caution

Spotify Technology SA’s shares fell to their lowest level since April 2025 on Jan. 17, with an intraday decline of 4.44%. The stock has dropped 4.98% over two days, marking its second consecutive session of losses amid renewed investor caution.

The decline followed Spotify’s announcement of a third U.S. subscription price hike in three years, effective Jan. 15. The Individual Premium plan rose to $12.99 per month, with higher tiers also increasing, as the company shifted toward a monetization-first strategy under new co-CEOs Alex and Gustav Söderström. While the move initially spurred a 3% pre-market rally, analysts later tempered expectations, citing risks of subscriber churn and competition from platforms like Apple and Amazon.

Spotify’s Q2 2025 results showed strength, with revenue rising 15% year-on-year to €4.2 billion and free cash flow hitting €700 million. Deutsche Bank and Jefferies maintained “Buy” ratings, highlighting the potential for margin expansion and a PEG ratio of 0.68, suggesting undervaluation. However, regulatory pressures over artist pay and macroeconomic headwinds, including a possible “subscription recession,” remain key risks. The company’s AI-driven innovations and ecosystem diversification, including audiobooks and music videos, aim to justify pricing power and retain users.

Spotify’s stock price movements, coupled with its financial performance and strategic pricing decisions, highlight the balance it must strike between profitability and user retention. Upcoming challenges include balancing price increases with churn management and navigating regulatory debates over revenue distribution. With a February 10 earnings report set to clarify the impact of recent changes, investors will closely watch user retention and ARPU trends. If Spotify can sustain growth while expanding margins, the stock may re-rate toward previous highs. However, any signs of subscriber attrition or regulatory setbacks could prolong volatility.