Tuesday, November 6, 2018

Spotify announces share buy-back scheme | UNLIMITED | CMU


Spotify yesterday announced a stock repurchase programme, which means it will seek to buy back up to ten million of its own shares. The announcement follows a further dip in the streaming firm’s share price last week following its latest quarterly report to investors.

In a statement yesterday, Spotify said that “repurchases of up to 10,000,000 of the company’s ordinary shares have been authorised by the company’s general meeting of shareholders and the board of directors approved such repurchase up to the amount of $1 billion. The repurchase programme will expire on 21 Apr 2021”.

Adding some customary small print, the statement went on: “The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. The repurchase programme will be executed consistent with the company’s capital allocation strategy of prioritising investment to grow the business over the long term”.

So that’s fun. Spotify’s share price was mainly on the up in the months following the streaming firm’s direct listing onto the New York Stock Exchange back in April. However, it peaked in July and has since been on a downwards trajectory overall, in part impacted by a more general slide in the value of tech sector stock.

It slid further following last week’s quarterly report, even though premium sign ups were at the upper end of expectations and overall losses were down. The firm also lowered its anticipated year end premium subscriber count and admitted that the cut in losses was mainly down to slow recruitment delaying research and development work.

Companies usually instigate share buy-back schemes – ultimately reducing the number of people any future profits will be shared between – when they feel their stock is undervalued. It’s generally an attempt to indicate to the market that the board has good faith in the future performance of the company. Following yesterday’s announcement Spotify’s share price rose a little.

Will CMU now be selling back its single Spotify share though? Fuck no, we’re not short-termists, we’re in this for the long haul. We’ll still be there, clutching that single share the day the ship finally goes down in dramatic splendour. Sorry, I mean, the day the streaming boom delivers the goods, market-leading Spotify goes into profit and a first dividend is paid. Can’t wait.

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