Shares of Spotify (NYSE:SPOT) are in focus on Monday, with SPOT stock up 6% on the day. There are likely several factors in play.
First, stocks in general are on the rise Monday. After a volatile start to the session, the S&P 500 is higher by roughly 1.5% on the day while the Nasdaq is up roughly 1.2%.
However, both gains pale in comparison to SPOT stock, which is rallying ahead of its earnings report. Due tomorrow after market close, investors are hopeful that management can deliver some good news.
Specifically, they are hoping that management announces an increase in streaming prices. Apple (NASDAQ:AAPL) recently raised its prices for Apple Music, so the hope is that Spotify may follow suit with an increase of its own.
On the one hand, it would be an immediate bump in sales — provided it doesn’t lose customers as a result. On the other hand, a lower price may be attractive for gaining market share versus its competitors.
Currently, Apple Music now charges $10.99 a month, up $1 or about 10% from its prior price. Spotify charges $9.99 a month. That does leave some wiggle room should management choose to raise prices, even if it just matches Apple’s pricing.
In April 2021, Spotify previously raised the prices for some of its family and premium plans but kept its base rate unchanged.
SPOT Stock Earnings Preview
Shares of SPOT stock officially registered a new 52-week low in mid-October when it hit $78.50. That was down almost 80% from the all-time high. So to say it’s been a rough ride for long-term investors is a bit of an understatement.
In July, the company reported a top-line beat, a bottom-line miss and impressive user growth numbers. That was enough to spur the stock higher by 12%.
Even with today’s nice gains though, SPOT stock is still below its pre-earnings level from last quarter. Regardless, investors will be looking for a similar post-earnings rally when the company reports.
Remember, the company recently added Spotify Audiobooks, adding to its library of podcasts and music. Clearly, the company is looking at ways to generate further growth.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
