Rowan Street Capital, a self-proclaimed “private equity fund focused on the long-term ownership of several ‘extraordinary’ businesses,” maintains an optimistic position on Spotify (NYSE: SPOT) shares, even though the stock is threatening to fall below $80 apiece. for the first time in the company’s history.
Seven-year-old Rowan Street doubled down on its commitment to Spotify shares in a recently released letter for the third quarter of 2022. At the close of the market today, SPOT was worth $82.13, reflecting a decrease of 4.43 percent compared to the value at the end of the day on Monday and a decrease of more than 66 percent since the beginning of 2022.
Before the close, Spotify shares hit a record low of $80.51 per share on Tuesday. To date, the Stockholm-headquartered company has not faced a stock price below $80 per share, and SPOT was worth much more than $100 at the time (and in subsequent months) of the company’s IPO in April 2018.
“We estimate Spotify could earn more than $3.5 billion in adjusted operating profit by 2025. If we add to this only a 20-fold coefficient, which may turn out to be quite conservative for a company growing by 20+%, this will give us an estimate of $70 billion (4 times the current market price).
“Now the market may not reflect Spotify’s value creation for the next 6 months or even a year, but there is a chance that over the next 5 years the stock will jump significantly higher, reflecting the underlying value creation in the company,” he said. the essence is over.
Moving forward, it’s worth seeing if these and similar valuations of Spotify shares turn out to be accurate.
Of course, all sorts of analysts gave bullish SPOT forecasts when the stock was rising above $300 per share (and almost $400 per share), but many have since taken relatively bearish positions and/or cashed out millions of Spotify shares. .
However, Rowan Street is not the only firm that still owns Spotify, in which Daniel Ek invested another $50 million over the summer. For example, last month Evercore confirmed its optimistic view of the streaming giant, and The Guardian Fund remains optimistic about SPOT, partly due to the company’s perceived monetization potential.