Activist Investor ValueAct buys shares of Spotify

Activist investor ValueAct bought a stake in Spotify, with the head of the fund arguing that costs at the music streaming service had “exploded” as it built its podcast business.

Mason Morfit, head of the San Francisco-based investment firm, revealed this view at a conference hosted by Columbia University on Friday. Morfit did not disclose the size of the stake but said it was ValueAct’s latest position.

“Spotify’s strength is in combining technical breakthroughs with organizational capabilities — it organizes creators and copyright holders to build an entirely new economic model that benefits all.” participants,” said Morfit.

“During the boom, it applied these powers to new markets like podcasts, audiobooks, and live chat rooms. Operating costs and funding for content explode. It’s currently sorting out what’s built to last and what’s built for the bubble.”

ValueAct has driven change at other major publicly traded media companies in the past. Last year it buy shares in The New York Times Company, urging news business leadership to shift subscribers to higher-priced plans to increase revenue.

“We welcome ValueAct as an investor in Spotify,” the company said in a statement. ValueAct did not respond to a request for comment.

Line chart of Market Value ($billion) shows Spotify's valuation has fallen dramatically from its record high

Spotify in January announced that it would cut 6% of staff in an effort to contain costs, which have increased dramatically as audio streaming services Rapid expansion in podcasts and audiobooks.

The boost, which includes major deals with the likes of broadcaster Joe Rogan, has helped boost Spotify’s ad business and propelled last year’s revenue up more than 20% to 11.7 billion euros. However, soaring losses as the company increased spending, with the business reporting a loss of 430 million euros last year.

Daniel Ek, chief executive officer, told investors that 2023 marks “a new chapter for us,” as he restructures the company’s lines of business to prioritize “speed and efficiency.” fruit”. The chief content officer, Dawn Ostroff — a Hollywood powerhouse who joined Spotify in 2018 from Condé Nast Entertainment — has agreed to leave as part of the reshuffle.

Still, the results underscore Spotify’s reach, with the company having nearly half a billion users. Analysts at Morgan Stanley said they believe it’s possible that “2023 will be the year this business finally mars the consistently strong user and revenue growth trends it has posted for years with the trend. towards meaningful profits”.

Spotify shares were up 4.3 percent mid-morning Friday, bringing their year-to-date gains to nearly 60 percent and giving the company a market capitalization of about $24 billion. The rise comes alongside a widespread resurgence in shares of other high-growth businesses that last year were dumped by investors as interest rates rose.

Despite the recovery, Spotify’s value is still a fraction of its record high in 2021, when the business was valued at just under $70 billion.

Source by [author_name]


News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button