Does Spotify Still Have the (Pricing) Power?

If you had to pick a soundtrack for Spotify shares in 2026, a Baroque lament or a mopey darkwave number might work best, considering their 27% drop.

As the music and podcast streaming giant prepares to report its fourth-quarter and full-year 2025 earnings tomorrow, its vaunted pricing power and the business potential of new offerings will face the music. More optimistic analysts are keeping the faith that it will be a mix heavy on sunshine pop.

Take a Hike

Spotify’s stock has slid lower amid a broader tech sell-off. Markets, therefore, will be listening closely to what executives say about the streaming service’s outlook as they seek out value in the wake of the dip.

One major consideration will be price hikes, which Spotify has used to drive revenue growth in recent years. In November, executives said past hikes led to only a “small amount of churn.” Spotify had 713 million active users at the end of the third quarter, during which time the number of paid subscribers increased 12%. Meanwhile, the company plans to keep testing its pricing power: This month, the US Premium subscription fee went up $1 to $12.99 per month. Another consideration for investors will be the earnings potential of new offerings:

• Last week, Spotify entered the physical book business, partnering with online retailer Bookshop.org to let audiobook listeners buy books in its app. That puts it toe-to-toe with e-commerce giant Amazon, whose business was built on a foundation of online bookselling.
• Last month, Spotify expanded its creator monetization program and added new video tools for podcasters, pitting it against YouTube. That followed another encroachment on the Google-owned video giant’s market share in December, when Spotify made music videos available to its Premium subscribers in the US and Canada.

With Spotify shares at $422 as of Friday, many analysts are bullish on its buy-the-dip potential. Goldman Sachs upgraded the company’s rating to “buy” last month and has a $700 price target, implying significant upside. The bank said the company’s gross margin, which came in at 32% in the third quarter, could rise by 80 to 100 basis points annually over the next four years thanks to booming ad revenue, modest podcast costs and a strong position to negotiate royalty payments. Citi ($650 price target), UBS ($800) and Wells Fargo Securities ($710) feel much the same.

Ghost in the Machine: Spotify recently said that it accounts for 30% of global music industry revenue, having paid $11 billion to the industry last year, a 10% increase. That money, however, goes to a combination of rights-holders, including labels, distributors and publishers, and does not give a clear picture of how much goes to artists, who are often subject to low earnings in the streaming era.