Shares of Spotify (NYSE:SPOT) stock are in full focus today after CEO Daniel Ek disclosed a $50 million insider purchase. This year, SPOT stock has gotten hammered; shares are down over 50% year-to-date (YTD). For comparison, the S&P 500 is down about 13% YTD.
Last week, the streaming company reported earnings, which caused SPOT stock to close down more than 12%. Spotify posted revenue of 2.66 billion euros ($2.81 billion) versus analyst estimates of 2.62 billion euros ($2.77 billion). Meanwhile, earnings per share (EPS) came in at 21 euro cents versus analyst estimates of a loss of 24 euro cents.
Spotify did fall short on paid subscribers and ad-supported revenue for the period. However, despite the decline, Ek feels confident in the company.
CEO Daniel Ek Discloses SPOT Stock Purchase
In a post to Twitter (NYSE:TWTR), Ek stated the following:
“I’ve always been vocal about my strong belief in Spotify and what we are building. So I am putting that belief into action this week by investing $50M in $SPOT. I believe our best days are ahead…”
The CEO also mentioned that he is not required to disclose this purchase, as Spotify is based in Sweden. Still, he said that he “thought it was important for shareholders to know.”
Ek’s purchase may be too small to trigger an immediate 13G filing, which requires an individual or entity to file a form to the U.S. Securities and Exchange Commission (SEC) when surpassing 5% ownership. Any further position changes must be reported 45 days after the year in which the transaction occurred.
However, the CEO has been steadily selling his position since 2019. That year, Ek owned 36.8 million shares. As of Feb. 3, 2022, he now owns 32.3 million shares. That means Ek sold 4.5 million shares between 2019 and the beginning of 2022. Ek did not purchase any shares between 2019 and February 2022, either. According to the most recent 13G filing, the CEO owns 16.7% of all shares outstanding.
Who Else Is Betting Big on Spotify?
Tracking institutional ownership is important, as these large funds provide liquidity and price support for stocks. During the fourth quarter, 587 funds reported owning SPOT stock, an increase of 62 funds from the prior quarter. In addition, the institutional put/call ratio lies at 1.67%, which means more funds own put options against the company than call options. Based on Spotify’s returns this year, it appears the funds who own put options are sitting on a profit.
With that in mind, let’s go over the top five shareholders:
- Daniel Ek, cofounder and CEO: 32.3 million shares.
- Baillie Gifford: 23.2 million shares.
- Sven Hans Martin Lorentzon, cofounder and director: 20.9 million shares.
- T. Rowe Price (NASDAQ:TROW): 16.1 million shares.
- Morgan Stanley (NYSE:MS): 12.9 million shares.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
