Spotify CEO Daniel Ek, who recently sold almost $36 million worth of company stock. Photo Credit: Spotify
It’s good to be an executive at Spotify, where co-founder Martin Lorentzon, CEO Daniel Ek, and others have sold a cumulative total of over $550 million in company stock as shares continue to ride high.
The massive Spotify stock selloff emerged in a fresh set of SEC disclosures and arrives on the heels of a solid Q3 earnings report. While the relevant C-suite is hardly unfamiliar with cashing in on company shares – we’ve covered a number of the transactions – prior insider trades haven’t been quite so large.
Then again, these prior trades weren’t executed when Spotify stock was approaching a record $500 per share. At the time of writing, SPOT was hovering around $460 – beneath its 52-week high of nearly $490 but about 150% more than its value at the same point in November 2023.
The largest of the overpaid execs’ sales (broken down in full below) came from Lorentzon, who secured an over $383 million windfall by parting with almost 960,000 shares. Ek sold $35.81 million in Spotify stock, and insiders’ SPOT sales (as documented by SEC filings from the 13th, 14th, and 15th) totaled an astonishing $550,501,616.72.
That stock-sale figure has arrived against the backdrop of Spotify’s continued diversification beyond music – referring to podcasts, audiobooks, and now video.
And as this diversification’s audiobook bundles have already saved Spotify north of $100 million that would have otherwise reached songwriters and publishers, the optics associated with the transactions aren’t exactly positive.
Furthermore, SPOT’s ascent is also less than positive when considered from the perspective of the major labels’ sagging share prices – including $24.02/€22.66 a pop for Universal Music Group stock, reflecting a double-digit decrease from 2024’s beginning and especially the YTD high.
Of course, the companies’ catalogs play a key role on Spotify notwithstanding the increasingly aggressive embrace of non-music entertainment. Heading into the new year, it remains to be seen whether superfan initiatives, adjacent “deluxe” plans, and possible price bumps can help reverse the trend of slowing subscription-revenue growth at the majors.
Regarding the bigger picture, the market leader Spotify’s pivot towards different (seemingly popular) formats doesn’t bode well for the industry in the long term – including, to name one of multiple important reasons, because of the inherent release-volume advantage video “content” possesses 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.