Spotify stock soared in 2024 but while analysts are bullish, recent divestment by executives and investors casts a shadow over the future. | Credit: Getty Images
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Key Takeaways
Spotify stock has experienced a notable surge in 2024.
Analysts are still bullish on the music streaming giant’s long-term prospects.
However, some executives and investors have recently sold large amounts of SPOT shares.
Spotify’s stock has surged by triple digits in 2024, driven by strong subscriber growth and strategic price increases. The company briefly crossed the $100 billion market cap milestone in early December thanks to this strong performance.
However, a closer look reveals significant insider selling, including by CEO Daniel Ek and co-founder Martin Lorentzon. As the year draws to a close, questions remain about Spotify’s future trajectory.
Big Jump in 2024
Spotify stock has skyrocketed by triple digits so far this year, fueled by significant subscriber growth and strategic price increases. The stock nears $500 this year, a level it reached only once in its listing history.
In its third-quarter earnings announcement on Nov. 12, the company exceeded subscriber and user growth expectations but fell short on revenue and earnings. Spotify reported earnings of $1.53 per share and revenue of $4.22 billion, compared to analysts’ forecast of $4.02 billion.
In the first week of December, Spotify briefly crossed the $100 billion market capitalization mark. Its shares rose by 9%, that week, to $498.63, the second-highest closing price in its history, just below its all-time high of $502.
With yesterday’s close at $456.29 per share, Spotify has achieved a remarkable 143% gain in 2024, making it the only music company to reach triple-digit growth, this year, far outpacing Live Nation’s 42% increase.
The $100 billion milestone coincided with the release of Spotify’s 2024 Wrapped feature, a personalized breakdown of users’ streaming habits. First launched in 2015, Wrapped remains a key product for user engagement.
But Execs and Investors Cash Out
Despite Spotify’s strong stock performance, several top executives and investors have sold significant portions of their shares. According to recent filings with the Securities and Exchange Commission (SEC), CEO Daniel Ek has been particularly active in offloading shares. On Nov. 20, he sold 75,000 shares for $34.8 million, followed by another 75,000 shares on Nov. 26 for $36.1 million.
With a $35.8 million sale on Nov. 15, Ek’s stock sales in November alone totaled $106.7 million. For 2024 so far, Ek has sold 875,000 shares, bringing his total proceeds to $283 million, including earlier transactions of $57.5 million in February and $118.8 million in April.
Spotify executives and investors sold large amounts of SPOT shares. | Credit: U.S. Securities and Exchange Commission
Co-founder Martin Lorentzon also made significant sales this year. On Nov. 13, Lorentzon sold 959,762 shares for $383.75 million. His 2024 sales now amount to 1,488,364 shares, generating $556.77 million.
These sales account for nearly half of the $1.1 billion worth of stock sold by Spotify executives and board members in 2024. Including non-executive directors, the total cash-out rises to $1.14 billion.
Other executives and former executives have also contributed to the stock sell-off. Chief Product and Technology Officer Gustav Söderström, Chief Business Officer Alex Norström, and former CFO Barry McCarthy have collectively sold shares worth millions, alongside transactions by HR chief Katarina Berg, General Counsel Eve Konstan Mothner and others.
Even interim CFO Ben Kung and Public Affairs Chief Dustee Jenkins joined the selling activity, further highlighting the widespread divestment among Spotify insiders.
Adding to the trend, Cathie Wood’s ARK Funds sold 10,022 Spotify shares in the first week of December, valued at approximately $4.8 million. This move may reflect profit-taking, contrasting with Spotify’s exceptional year-to-date performance.
What’s Ahead for Spotify?
Looking ahead to the fourth quarter of 2024, Spotify offered mixed projections. It expects to add 8 million premium subscribers, bringing the total to 260 million in line with estimates, and anticipates monthly active users reaching 665 million, surpassing the consensus of 660 million.
However, revenue is forecasted at €4.1 billion, lower than the predicted €4.26 billion.
For the fourth quarter of 2024, analysts estimate Spotify’s earnings per share at $2.14, with projections ranging between $1.68 and $2.70. This compares to an EPS of $1.53 in the previous quarter.
Over the past year, Spotify exceeded its EPS estimates 75% of the time, outperforming the industry average of 54.33% during the same period. Additionally, Spotify has consistently outperformed its industry over the last calendar year.
Sales forecasts for the next quarter project revenues of $4.36 billion, with a range of $4.13 billion to $4.49 billion. The company reported $4.38 billion in revenue for the previous quarter.
Over the past 12 months, Spotify surpassed its sales estimates 100% of the time, significantly outperforming the industry, which achieved a beat rate of 56.76%. Similarly, Spotify has maintained an edge over its industry peers throughout the last calendar year.
Analysts expect a notable surge for SPOT shares. | Credit: TipRanks
For the 2025 full year, 27 Wall Street analysts have provided 12-month price targets for Spotify Technology SA. The average target is $477.35, with estimates ranging from a low of $370.00 to a high of $615.00.
This average implies a potential decline of 4.6% from Spotify’s latest closing price of $456.29.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
