Spotify (NYSE:SPOT) was cut to Neutral from Buy at Redburn, with analysts lowering the price target for the stock to $160 from $170.

The analysts told investors in a note that their previous buy thesis on the stock was based on margin expansion. However, they now estimate the new audiobook offer will be gross margin dilutive.

“The roll-out in the UK / Australia could erase c60bp of gross margin, with the US having a further 140bp impact,” they wrote. The firm estimates the audiobook roll-out could cost Spotify €260 million.

“We increase our subscriber and ARPU projections but cut our 2025e EBIT by 8%,” they added. In addition, the analysts believe this represents another deferral of profitability and could also incite a response from Amazon (NASDAQ:AMZN).

The Spotify share price is down around 2.4% premarket. However, the stock has made strong gains this year, up 96%.