ValueAct Capital Management has taken a stake in Spotify Technology SA, at a time when the audio streaming company is looking to cut costs.
“We welcome ValueAct as an investor in Spotify,” a spokesperson for the Swedish company said on Friday, without giving further details on the investment.
Shares of Spotify rose 3.5% to $125 (nearly Rs. 10,300).
ValueAct chief executive Mason Morfit disclosed the investment during a presentation at a Columbia University event in New York on Friday, according to Bloomberg News, which first reported the stake.
ValueAct, which declined to comment, sets itself apart from other activist investors by preferring to stay behind the scenes and rarely presents its investment ideas publicly.
He has invested more frequently in Japan in recent years, but has also invested in US companies such as Microsoft and Citigroup.
Meanwhile, Spotify has invested heavily in growing its podcast and audiobook business in 2022, with operating expenses growing twice as fast as revenue.
However, a tough economic environment paved the way for a tightening of the belt, with Spotify chief executive Daniel Ek announcing layoffs and organizational restructuring in January.
In January this year, the company announced plans to cut 6% of its workforce, adding to massive tech layoffs ahead of a possible recession.
“Over the past few months, we’ve made a tremendous effort to control costs, but it just hasn’t been enough,” chief executive Daniel Elk said in a blog post announcing the roughly 600 job cuts. .
Spotify’s operating expenses grew at twice the speed of its revenue last year as the audio streaming company invested aggressively in its podcast business, which is more attractive to advertisers due to levels of higher commitment.
© Thomson Reuters 2023
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