Netflix co-CEO and Spotify board member Ted Sarandos, who’s cashed in on over $6 million of the latter company’s stock. Photo Credit: Daniel Benavides
Another day, another multimillion-dollar stock dump: Netflix co-CEO Ted Sarandos is cashing in on Spotify stock (NYSE: SPOT) as it continues to ride high at north of $330 per share.
The Netflix co-head and Spotify board member Sarandos just recently disclosed the sizable SPOT sale in a regulatory filing. According to that document, the 60-year-old, who’s been on the Spotify board for eight years to the day, specifically exchanged 17,710 shares for a cool $6.02 million.
Within this pile of sold shares, 3,758 were attributed to a new stock option exercise; the remaining 13,952 exercised shares dated back to mid-June. While insider and director Spotify stock sales aren’t anything new – August selloffs included millions of dollars’ worth of pre-IPO shares held by lead independent director Christopher Marshall and stemming from his Technology Crossover Ventures private equity – the transaction underscores SPOT’s strong positioning at present.
We’ve charted major Spotify stock selloffs in detail. Predictably, sales were comparatively few and far between when shares were hovering around $150 apiece in mid-September of 2023 and especially when they struggled into the low-$70s in late 2022.
Now, though, SPOT is surging as the company continues to zero in on efficiency and profitability. When the market closed today, shares were worth $337.90 apiece – for an increase of almost 79% since 2024’s beginning.
Furthermore, as we reported yesterday, several analysts are decidedly bullish about Spotify stock’s path forward. In that same breakdown, however, we also covered some of the less positive assessments of SPOT’s outlook, mentioning user-growth concerns, possible subscriber-conversion woes, and different considerations.
Only time will tell which of these positions is accurate, but it’s worth reiterating a couple key points.
First is Spotify’s massive market cap of nearly $68 billion. Even with the benefit of the euro-dollar exchange rate, Universal Music’s own market cap (Euronext: UMG), at about $47.80 billion, is a whopping $20 billion or so smaller. Furthermore, this same Spotify market cap is over four and a half times bigger than that of Warner Music Group (NASDAQ: WMG).
Second is the ample pressure the situation is placing on Spotify (at least when it comes to its stock market positioning) to meet quarterly growth forecasts. That refers in part to user additions, but investors are evidently zeroing in on subscriber expansions and profitability.
To be sure, Spotify missed its Q2 2024 MAUs guidance by about five million, for an actual average of 626 million on the quarter. The fact was largely overlooked amid strong YoY subscriber growth (246 million total) and another quarter of profitability ($294.62 million/€266 million in operating income).
But with its increasingly tall expectations, the market might not be so forgiving moving forward – particularly if misses arrive on the subscriber and/or profit sides.
