It’s a fantastic time to be a Spotify executive, as co-founder Martin Lorentzon, CEO Daniel Ek, and others have sold more than $550 million in company stock as shares continue to rise.
The large Spotify stock selloff was revealed in a new set of SEC disclosures and comes after the company reported strong Q3 profits. While the relevant C-suite is not inexperienced with cashing in on business shares – we’ve chronicled such instances – previous insider trades have not been as substantial.
However, these previous deals were not made when Spotify’s price was approaching a record $500 per share. SPOT was trading around $460 at the time of writing, down from its 52-week high of roughly $490 but over 150% higher than its value in November 2023.
The largest of the overpaid executives’ transactions (details below) came from Lorentzon, who received more than $383 million by selling about 960,000 shares. Ek sold $35.81 million in Spotify stock, while insiders’ SPOT sales totaled $550,501,616.72 (according to SEC filings from the 13th, 14th, and 15th).
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That stock-sale figure comes against the backdrop of Spotify’s continued diversification outside music, including podcasts, audiobooks, and now video.
And, given that this diversification’s audiobook bundles have already saved Spotify more than $100 million that would have gone to composers and publishers, the optics of the transactions aren’t exactly great.
Furthermore, SPOT’s rise is less than favorable when seen in light of the big labels’ collapsing share prices, including Universal Music Group stock at $24.02/€22.66 per share, showing a double-digit drop from the start of 2024 and, particularly, the year-to-date peak.
Of course, the firms’ archives play an important role on Spotify, despite the growing aggressive acceptance of non-music entertainment. Going into the new year, it remains to be seen whether superfan activities, neighboring “deluxe” plans, and potential price increases can help reverse the pattern of declining subscription-revenue growth at the majors.
In the grand scheme of things, the market leader Spotify’s shift toward various (apparently popular) formats does not bode well for the industry in the long run, for a variety of reasons, one of which is the inherent release-volume advantage video “content” has over music.
Here’s a complete breakdown of Spotify insiders’ stock sales between November 13th and 15th.
11/13 – In the first of two transactions on the 13th, former CFO and current director Barry McCarthy sells 22,000 Spotify shares for $9,963,569.34.
McCarthy also cashes in on 21,500 shares, attributable to the “exercise of options under a registered plan” finalized in March 2020, for $10,026,357.30. Then, on the 14th, the former Peloton head parts with 20,900 shares, acquired from TCV back in 2014, for $9,979,891.77.
11/13 – General counsel Eve Konstan sells 16,234 stock-option shares for $7,340,722.47.
11/13 – Chief business officer Alex Norstrom sells 39,911 stock-option shares for $17,959,951.68.
11/13 – Director Shishir Mehrotra sells 7,987 shares (1,231 “exercised” and dating back to 2017, the remaining 6,756 stemming specifically from a fresh stock-option exercise) for $3,658,046.
11/13 – Finance VP Benjamin Kung sells 7,092 shares (592 restricted, the other 6,500 from a stock-option exercise) for $3,240,630.88.
11/13 – Director Heidi O’Neill sells 2,219 restricted shares for $1,010,798.88.
11/13 – Lorentzon’s Rosello Company sells 959,762 founder’s shares for $383,751,238.08.
11/14 – Chief HR officer Katarina Berg sells 46,545 stock-option shares for $22,348,168.85.
11/14 – CTO Gustav Söderström sells 79,888 stock-option shares for $38,442,795.11.
11/14 – Director Mona Sutphen sells 6,696 stock-option shares for $3,133,401.04.
11/14 – Director Thomas Staggs sells 7,959 stock-option shares for $3,833,545.32.
11/15 – Ek sells 75,000 shares (purchased in 2016) for $35,812,500.
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