3. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 49
Year to Date Loss as of August 5: 51.37%
On July 27, Spotify Technology S.A. (NYSE:SPOT) reported earnings for the fiscal second quarter of 2022. The company reported a loss per share of $0.66 and missed Wall Street expectations by $0.02. The company’s revenue for the quarter came in at $2.92 billion and beat revenue estimates by $62.57 million. As of August 5, Spotify Technology S.A. (NYSE:SPOT) has lost 51.37% of its value year to date.
On July 27, Spotify Technology S.A. (NYSE:SPOT) announced that it is cutting its hiring growth by 25% for the rest of 2022 and is monitoring macroeconomic conditions. Even though the company is currently facing macro headwinds, Wall Street analysts are bullish on the stock. On July 28, Citi analyst Jason Bazinet lowered his price target on Spotify Technology S.A. (NYSE:SPOT) to $145 from $150 and maintained a Buy rating on the shares. The analyst noted that the stock’s risk/reward ratio is compelling at current levels.
At the end of the first quarter of 2022, 49 hedge funds were bullish on Spotify Technology S.A. (NYSE:SPOT) and held stakes worth $1.90 billion in the company. This is compared to 53 positions in the previous quarter with stakes worth $3.46 billion. The hedge fund sentiment for the stock is negative.
In the second quarter of 2022, ARK Investment Management reduced its position in Spotify Technology S.A. (NYSE:SPOT) by 54%, bringing its stakes to $230.43 million. As of June 30, Catherine D. Wood’s hedge fund owns roughly 2.04 million shares of Spotify Technology S.A. (NYSE:SPOT) and is the most prominent shareholder in the company.
Here is what Rowan Street Capital LLC had to say about Spotify Technology S.A. (NYSE:SPOT) in its second-quarter 2022 investor letter:
“Spotify (NYSE:SPOT) disrupted the music industry and brought it back to life via streaming.
Daniel Ek, Spotify Founder and CEO
Visionary entrepreneur who set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry. He beat Apple, Amazon, Pandora to become the largest music streaming platform. Daniel owns 17% of the company, and his co-founder Martin Lorentzon owns 11%.
When Spotify went public in 2018, they were a music-streaming company, but they have evolved dramatically over the last four years. Daniel Ek’s ambitions did not stop at music, as Spotify is focused on building the global audio infrastructure of the Internet. They are continuing to expand and build on the strong foundation in music, applying their learnings and leveraging their leading 420 million user base to move into new verticals like podcasting and audiobooks, ultimately broadening their value proposition. As a result, they are building a more resilient business. For example, in three years, Spotify has gone from basically zero to being the market leader in podcasting – a business that we believe will enable a large influx of high-margin revenue through advertising and direct monetization. Just as video content is a trillion-dollar opportunity, we view audio through a similar lens. Spotify has the potential to become the Google of audio.
We believe Spotify is one of the most relevant digital platforms in existence today, as it has transformed itself to a fully-fledged platform where artists and creators can create, engage, and earn. A platform fueled by subscription, advertising and creator service models, applied to music, podcasts, audiobooks and more. At a current market value of just $20 billion, we think Wall Street is not appreciating the true long-term potential of the Spotify Machine.”
