Let the Selloff Begin: Spotify Insiders Have Sold Over $139 Million in Company Stock Following Strong Q2 Financials

Insiders have sold over $139 million worth of Spotify stock following the company’s release of solid Q2 financials. Photo Credit: Gizmodo

Why let a good rally go to waste? As Spotify shares (NYSE: SPOT) continue to hover well above $300 apiece following a positive Q2 earnings report, execs are selling off millions in stock. The sizable selloffs came to light in a series of regulatory filings, each dated July 23rd (when the second-quarter financials released) or later. As we previously covered, Spotify higher-ups and board members certainly aren’t strangers to stock sales.

But the last three days’ transaction influx undoubtedly stemmed from SPOT’s steady gains in recent months and then the post-earnings boost that elevated it to a 52-week high of $346.23 on Wednesday.

Furthermore, with the stock’s strong market performance presumably poised to continue amid Spotify’s commitment to profitability, additional insider trades are forthcoming. Keeping the focus on the present, however, six such sales, worth a cumulative $139.18 million, have been reported during the past three days.

The largest of these sales is attributable to Spotify co-founder Martin Lorentzon, who, like CEO Daniel Ek, has scooped up shares during periods of valuation turbulence.

SPOT’s rollercoaster ride in recent years – including stretches where it was holding around $70 and separate windows where its price approached $400 – has created multiple opportunities to simultaneously signal confidence in the business and set the stage for massive windfalls.

Spotify Insiders’ Stock Sales, July 23rd, 24th, and 25thJuly 23rd

1. Director Shishir Mehrotra – 1,231 Spotify shares (823 exercised shares dating to 2017, the remaining 408 restricted) sold for $419,463.25

July 24th

2. Co-president, CPO, and CTO Gustav Söderström – 52,788 optioned shares sold for $17,420,040

3. Interim CFO and VP of FP&A Ben Kung – 3,667 shares (3,000 optioned, the remaining 667 restricted and dating back to earlier in 2024) sold for $1,251,431.96

4. Co-president and CBO Alex Norström – 78,218 optioned shares sold for $26,437,684

5. Chief HR officer Katarina Berg – 23,337 optioned shares sold for $7,843,074.60

July 25th

6. Co-founder and director Martin Lorentzon (via Rosello Company) – 255,000 ordinary shares, first purchased when SPOT was hovering around $100 in May of 2022, sold for $85,812,600

Like with Spotify insiders’ other stock sales to this point in 2024 – including but not limited to over $90 million in June selloffs – the above-noted transactions don’t appear to be cause for investor concern.As DMN Pro broke down, higher-ups have long made a habit of cashing in on shares, with the moves seemingly based on near-term pricing fluctuations as opposed to operational realities or especially sensitive knowledge.

On the latter front, if insiders were entirely in tune with SPOT’s trajectory, they would have held off on a number of sales last year and instead made substantially more by selling now (or perhaps even further down the road).

In any event, the situation, based this time on solid financial footing and price increases as opposed to runaway enthusiasm for podcasts, reflects the strategic shift that’s underway at Spotify.

In short, the prior strategy of rapid-fire acquisitions and consistent quarterly losses has been replaced by a more cautious approach to spending at the business, which trimmed a year-over-year total of $181.57 million (€167 million) in R&D, general, and sales/marketing expenses in Q2 2024.