ValueAct Capital also has a reputation of an activist investor that nudges the company it invests in about how it runs.
San Francisco-based activist investor ValueAct Capital has acquired a stake in music streaming platform Spotify. According to a Bloomberg report, ValueAct’s chief Mason Morfit disclosed the company’s investment during an event at Columbia University in New York on Friday.
Morfit said that Spotify’s operating expenses and funding for content “exploded.” However, he did not disclose the size of the company’s new position.
An activist investor is typically a shareholder that nudges the company it invests in about how it runs and pressurizes them to make changes to improve margins. ValueAct Capital also has a similar reputation. Last year, it bought a stake in The New York Times Group and urged it to trim costs and increase its prices, a report citing a note from William Packer (MD, Media & Internet) at BNP Paribas Exane said.
At the time of writing this story, the company offers a free trial of Spotify Premium for four months after which it cost Rs 119 per month. Its rivals Apple Music and Gaana, on the other hand, offer just a one-month free trial post which both companies cost Rs 99 a month.
Last month, Spotify announced to lay off 6% of its workforce or nearly 600 employees. “Over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough,” the company’s chief executive Daniel Elk said.
Reuters last month reported that Spotify’s operating expenses doubled its revenue in 2022 as the company invested heavily in the podcast business that attracts more advertisers. With this job cut, the Stockholm-based company joined several other multinational tech giants like Alphabet, Microsoft, Meta, and Twitter who have trimmed their workforce amid a shaky economic outlook.