Spotify's Strategic Price Hikes and Monetization Efforts Boost Buy Rating

Spotify's strategic price increases and monetization initiatives have driven a Buy rating from Morgan Stanley analyst Benjamin Swinburne, who expects growth in average revenue per user (ARPU) by 3-4%. The unique pricing strategy in Australia is seen as a precursor to further monetization strategies, such as ad-free video podcasts, which could enhance ARPU and gross margins.

Morgan Stanley analyst Benjamin Swinburne has issued a Buy rating for Spotify Technology SA, citing robust growth prospects and strategic price increases. Swinburne expects the company to achieve an average revenue per user (ARPU) growth of 3-4% [1]. This positive outlook is driven by Spotify's innovative pricing strategies, particularly in Australia, which have the potential to enhance ARPU and gross margins.

Spotify's unique pricing strategy in Australia, where it offers ad-free video podcasts, is seen as a precursor to future monetization initiatives. This move is part of the company's broader strategy to diversify its revenue streams and improve its overall financial health. By offering ad-free video podcasts, Spotify can attract more users who are willing to pay for premium content, thereby increasing its ARPU.

Additionally, Spotify's strong performance in the digital music streaming market has garnered attention from other analyst firms. Oppenheimer has recently adjusted its price target for Spotify Technology SA to $825, maintaining an Outperform rating [2]. This adjustment reflects the positive market sentiment and the company's ability to execute its strategic initiatives effectively.

In conclusion, Spotify's strategic price increases and monetization initiatives, coupled with its strong market performance, have driven a positive outlook from analysts. As the company continues to innovate and diversify its revenue streams, investors can expect further growth in ARPU and gross margins.

References:
[1] https://ca.investing.com/news/analyst-ratings/tencent-music-price-target-raised-to-28-from-17-at-mizuho-on-arpu-growth-93CH-4155147
[2] https://www.marketscreener.com/news/oppenheimer-adjusts-price-target-on-spotify-technology-to-825-from-750-maintains-outperform-ratin-ce7c51dcd888f12c