Spotify CEO buys $50 million worth of stock
Spotify ( (PLACE) – Get the Spotify Technology SA report) CEO Daniel Ek said he bought $50 million worth of stock this week as the company’s shares fell in 2022.
The music streaming and podcasting company’s stock has fallen 63.57% since Jan. 3, when it traded at $244.16.
Ek reiterated his confidence in the company which has faced challenges as it expands its podcasting business.
“I have always expressed my strong belief in Spotify and what we are building,” he tweeted. “So I’m putting that belief into action this week by investing $50 million in $SPOT. I believe our best days are ahead of us…”
Morgan Stanley said the purchase is seen by investors as a “good” move since his net worth is over $2 billion.
Ek said he was not required to disclose his stake, but wanted shareholders to know about his purchase.
“Although I am not obligated to disclose these purchases due to our status as a foreign company, I thought it was important for shareholders to know,” he tweeted.
The company posted revenue of 2.66 billion euros in the first quarter against estimates of 2.62 billion euros, by Refinitiv, resulting in a profit of 21 euro cents per share against an estimated loss of 24 euro cents, per Refinitiv.
Spotify said its ads generated €282 million, or 11% of total revenue. Analysts were expecting $304.1 million in ad-supported revenue, according to FactSet.
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The number of paying subscribers grew 15% year-over-year to 182 million. The company had forecast 183 million paid subscribers. The Russian exit resulted in a loss of 1.5 million subscribers. During the first quarter, Spotify recorded 422 million monthly active users, a 19% year-over-year increase, beating its own estimate of 4 million listeners.
At the end of the quarter, Spotify reported 4 million podcasts on its platform, a slight increase from 3.6 million in the fourth quarter of 2021.
Spotify predicts it will hit 428 million monthly active users and 187 million total paid subscribers in the second quarter.
Analysts have lowered their Spotify price targets. Morgan Stanley lowered its price target to $225 from $300 while Canaccord Genuity Group reduced its price target to $250 from $300.
Truist Financial is even more bearish and lowered the target to $150 from $210.
In April, Spotify launched its video podcast and other video features for podcasters in the US, UK, Canada, Australia and New Zealand.
The company has worked to share its revenue with more artists.
In 2021, the company said there were over 50,000 artists who generated over $10,000 in royalties with over 1,000 artists who were able to generate $1 million in revenue, ek wrote in a post of blogging.
“Spotify accounts for over 20% of recorded global revenue, so you can multiply these amounts by ~4 to estimate how much the artist generates beyond Spotify,” he wrote. “In fact, the number of artists crossing each revenue threshold on Spotify (e.g. $10,000, $100,000, $1M and even $5M) has more than doubled over the past five years.”