NEW YORK (CelebrityAccess) — ValueAct Capital Management, a hedge fund with a history of taking an active role with its investments, has taken a stake in Spotify as the company struggles to turn a profit.
The investment was revealed by ValuAct’s CEO Mason Morfit during a presentation at the 13D Monitor Active-Passive Investor Summit in New York on Friday.
“Spotify’s superpower was combining engineering breakthroughs with organizational abilities — it organized creators and copyright owners to build an entirely new economic model that benefited everyone involved,” Morfit said during the presentation, according to the Financial Times.
“During the boom, it applied these powers to new markets like podcasts, audiobooks and live chat rooms. Its operating expenses and funding for content exploded. It is now sorting out what was built to last and what was built for the bubble,” Morfit added.
Spotify, which grew substantially in the last few years, appears to be seeking to cut costs. Their latest quarterly earnings report revealed that even as revenue and monthly active users grew, the company continued to lose money, with an operating loss of 231 million for Q4 2022.
In January, the company announced plans to cut 6% of its workforce, or about 600 employees, as part of its cost-cutting efforts.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” Spotify CEO Daniel Ek said in a note announcing layoff plans to staff in January.
