Spotify Technology S.A. (SPOT) shares surged 7.47% in pre-market trading on Monday following the company's announcement of a price increase for its premium individual subscription in select markets. The Swedish music streaming giant plans to raise the monthly subscription fee from 10.99 euros to 11.99 euros ($13.86) starting September, a move that has been well-received by investors.
The price hike will affect premium subscribers across various regions, including South Asia, the Middle East, Africa, Europe, Latin America, and the Asia-Pacific. Spotify stated that over the next month, subscribers in these markets will receive an email explaining the price increase. This strategic decision is seen as part of the company's efforts to improve its profit margins in an increasingly competitive streaming market.
The market's positive reaction to the news underscores investor confidence in Spotify's ability to monetize its user base more effectively. The price increase comes at a time when the company's shares have already seen significant growth, having risen about 40% year-to-date prior to this announcement. While the long-term impact of the price hike remains to be seen, the immediate market reaction suggests that investors view this as a positive step for Spotify's financial performance and future profitability.
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