Rowan Street Capital, an investment management company, released its 2022 yearly update. A copy of the same can be downloaded here. The fund declined -61% in 2022, due to the decline of growth stocks in the year as the fund’s portfolio is dominated by growth companies. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Rowan Street Capital highlighted stocks like Spotify Technology S.A. (NYSE:SPOT) in its Q4 2022 investor letter. Headquartered in Luxembourg, Luxembourg, Spotify Technology S.A. (NYSE:SPOT) provides audio streaming services. On January 10, 2023, Spotify Technology S.A. (NYSE:SPOT) stock closed at $90.79 per share. One-month return of Spotify Technology S.A. (NYSE:SPOT) was 14.46%, and its shares lost 360.75% of their value over the last 52 weeks. Spotify Technology S.A. (NYSE:SPOT) has a market capitalization of $17.534 billion.
Rowan Street Capital made the following comment about Spotify Technology S.A. (NYSE:SPOT) in its Q4 2022 investor letter:
“We have written a few times (Q2 ‘20 Letter, Q2 ‘21 Letter, Q2 ‘22 Letter) about Spotify Technology S.A. (NYSE:SPOT) and it still remains our favorite idea that is currently extremely mispriced by the market, in our view.
Spotify is estimated to end 2022 with 479 million monthly subscribers. Management thinks that their subscribers can get 1 billion over the next 4-5 years. The paid subscribers are estimated to end 2022 at 202 million. Therefore, based on today’s price, we are paying only $74 per paid subscriber. Now, let’s assume that Spotify can get to only 5 euros in ARPU (they are at 4.63 euros currently), then they would be collecting 60 euros per paid subscriber over a 12 months period, which makes our current payback period of only 1.2 years. This may not be an ideal comparison, but just for some context, Netflix is currently selling for $590 per user and traded as high as $1,400 per user in 2021. According to the “Netflixed: the epic battle for America’s eyeballs” book by Gina Keating, the founder/CEO of Netflix Reed Hastings offered $200 per subscriber to Blockbuster back in 2007. Blockbuster’s management was insulted by such a low-ball figure and rejected his acquisition offer — the rest was history…” (Click here to read the full text)
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Spotify Technology S.A. (NYSE:SPOT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held Spotify Technology S.A. (NYSE:SPOT) at the end of the third quarter, which was 49 in the previous quarter.
We discussed Spotify Technology S.A. (NYSE:SPOT) in another article and shared the best long-term growth stocks to invest in. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
