ValueAct Capital Management has acquired 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 spokesman for the Swedish company said on Friday, without giving further details about the investment.
Spotify’s shares rose 3.5 percent to $125 (nearly Rs 10,300).
ValueAct chief executive Mason Morfit announced the investment Friday during a presentation at a Columbia University event in New York, according to Bloomberg News, which first reported the investment.
ValueAct, which declined to comment, differs from other activist investors in that it prefers to remain behind the scenes and rarely publicly presents its investment ideas.
It has invested more frequently in Japan in recent years, but has also invested in US companies, including Microsoft and Citigroup.
Meanwhile, Spotify has invested heavily in building its podcast and audiobook businesses in 2022, with operating expenses growing twice as fast as revenue.
However, a challenging economic environment set the stage for belt-tightening as Spotify CEO Daniel Ek announced layoffs and an organizational restructuring in January.
In January this year, the company announced plans to cut 6 percent of its workforce, adding to massive layoffs in the tech sector in preparation for a possible recession.
“We’ve made significant efforts to contain costs in recent months, but it just hasn’t been enough,” Chief Executive Daniel Elk said in a blog post announcing about 600 job cuts.
Spotify’s Operating expenses grew twice as fast as revenue last year as the audio-streaming company aggressively invested money in its podcast business, which is more attractive to advertisers due to higher engagement.
© Thomson Reuters 2023
