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Rowan Street Capital LLC, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. Over many years, the fund concluded that its sole focus should be on identifying and partnering with visionary CEOs and the best entrepreneurs in the world, preferably in the earlier-to-mid stages of their careers. Rowan Street Capital believes in playing the long-term game with long-term people. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Rowan Street mentioned Spotify Technology S.A. (NYSE:SPOT) and explained its insights for the company. Founded in 2006, Spotify Technology S.A. (NYSE:SPOT) is a Stockholm, Sweden-based entertainment services provider with a $22.2 billion market capitalization. Spotify Technology S.A. (NYSE:SPOT) delivered a -51.61% return since the beginning of the year, while its 12-month returns are down by -54.32%. The stock closed at $115.62 per share on July 21, 2022.
Here is what Rowan Street has to say about Spotify Technology S.A. (NYSE:SPOT) in its Q2 2022 investor letter:
"Spotify (NYSE:SPOT) disrupted the music industry and brought it back to life via streaming.
Daniel Ek, Spotify Founder and CEO
Visionary entrepreneur who set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry. He beat Apple, Amazon, Pandora to become the largest music streaming platform. Daniel owns 17% of the company, and his co-founder Martin Lorentzon owns 11%.
When Spotify went public in 2018, they were a music-streaming company, but they have evolved dramatically over the last four years. Daniel Ek's ambitions did not stop at music, as Spotify is focused on building the global audio infrastructure of the Internet. They are continuing to expand and build on the strong foundation in music, applying their learnings and leveraging their leading 420 million user base to move into new verticals like podcasting and audiobooks, ultimately broadening their value proposition. As a result, they are building a more resilient business. For example, in three years, Spotify has gone from basically zero to being the market leader in podcasting - a business that we believe will enable a large influx of high-margin revenue through advertising and direct monetization. Just as video content is a trillion-dollar opportunity, we view audio through a similar lens. Spotify has the potential to become the Google of audio.
We believe Spotify is one of the most relevant digital platforms in existence today, as it has transformed itself to a fully-fledged platform where artists and creators can create, engage, and earn. A platform fueled by subscription, advertising and creator service models, applied to music, podcasts, audiobooks and more. At a current market value of just $20 billion, we think Wall Street is not appreciating the true long-term potential of the Spotify Machine."
Photo by sgcdesignco on Unsplash
Our calculations show that Spotify Technology S.A. (NYSE:SPOT) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Spotify Technology S.A. (NYSE:SPOT) was in 49 hedge fund portfolios at the end of the second quarter of 2022, compared to 53 funds in the previous quarter. Spotify Technology S.A. (NYSE:SPOT) delivered a -7.54% return in the past 3 months.
In July 2022, we also shared another hedge fund’s views on Spotify Technology S.A. (NYSE:SPOT) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.