Spotify (SPOT) Trades Below its IPO Price

Rowan Street Capital, an investment management company, released its first-half 2022 investor letter. A copy of the same can be downloaded here. At the end of the first half, the fund is 57% down. The second quarter contributed the majority of the fund’s decline, which was -41%. However, at the end of July 20, the fund was 19% up.  For more information on the fund’s top picks in 2022, please check its top five holdings.

In the letter, Rowan Street Capital discussed its major performance detractors like Spotify Technology S.A. (NYSE:SPOT). Spotify Technology S.A. (NYSE:SPOT) is an audio streaming service company, headquartered in Luxembourg, Luxembourg. The stock of Spotify Technology S.A. (NYSE:SPOT) closed at $122.73 per share on August 11, 2022. One-month return of Spotify Technology S.A. (NYSE:SPOT) rose to 27.42% and its shares lost 42.93% of their value over the last 52 weeks. Spotify Technology S.A. (NYSE:SPOT) has a market capitalization of $23.645 billion.

Here is what Rowan Street Capital specifically said about Spotify Technology S.A. (NYSE:SPOT):

“Spotify Technology S.A. (NYSE:SPOT) is the #1 holding in the fund and we have covered it numerous times in our previous letters.

• In 2021, they grew Monthly Active Users by 18% and are estimated to grow 16% in 2022
• Free Subscribers increases by 30%
• Total Revenues increased 23% in 2021
• Ad-supported revenues grew 62% in 2021 and have been growing at 33% per annum for the past 5 years
• Gross Profits increased 29%

Spotify‘s stock was down -26% in 2021 and is down another -54% in 2022. As you can see from the graph above, Mr. Market has been “depressed” about Spotify as it took its stock price below its IPO price in 2018, and sees nothing but trouble ahead, along with the rest of growth tech stocks. This is contrary to 2020-21, when Mr. Market felt euphoric about Spotify (stock was as high as $370), and could only see only the favorable factors affecting the business. At today’s price, investors are only paying about $98 per paid subscriber when they buy Spotify stock. Just for entertainment purposes, investors were willing to pay close to $1,200 per subscriber for Netflix in 2021…” (Click here to read more)

Photo by Alexander Shatov on Unsplash

Spotify Technology S.A. (NYSE:SPOT)) is in not on the list of  30 Most Popular Stocks Among Hedge Funds. As per our database, Spotify Technology S.A. (NYSE:SPOT) was held by 49 hedge fund portfolios at the end of the first quarter, which was 53 in the previous quarter.

We discussed Spotify Technology S.A. (NYSE:SPOT)) in another article and shared the list of media stocks that are getting hammered. You can check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.

Disclosure: None. This article is originally published at Insider Monkey.