The Guardian Fund, an Amsterdam-headquartered investment management firm, has predicted that Spotify stock (SPOT) will be worth five times more by 2030.
Guardian Fund higher-ups made the bold prediction in a recent letter to their investors. Beginning by listing the companies that the Fund has stakes in (Amazon, Google, Roku, Shopify, and others, aside from Spotify), the text notes that the firm enjoyed a return last year of 52.21 percent, “measured in euros and net of fees and expenses,” on its investments.
Building upon the point, the 11-year-old Guardian Fund states that its first play for “a pure software business” came in November of 2011, with a purchase of Microsoft stock at $19.60 per share. (MSFT gained slightly during today’s trading hours, with shares resting at $242.20 apiece when the market closed.) “All our businesses have a long runway of growth ahead,” continues the entity, before detailing its vision for Spotify during the next decade or so.
“At the current share price, Spotify basically only represents a fraction of the value they will be able to unlock in the growing market of audio entertainment. The key for Spotify is to change a variable cost base into a fixed cost base just like Netflix has,” writes the Guardian Fund.
“As the market share of the big labels, measured by the daily hours of engagement of the big labels, is declining, Spotify will be able to adjust its business model and create enormous operational leverage meaning that profitability will grow faster than expenses.
“The music catalogue is not the business model. The value lies in the machine learning that drives discovery and engagement, the original content from people like Michelle Obama, Kim Kardashian, and Joe Rogan, the data analytics and distribution for artists, the direct and social relations artists can have with fans through music and videos,” continues the unique take.
“We believe that Spotify will be worth at least five times more in 2030,” finishes the Guardian Fund. Interestingly, when the firm sent the investor letter last month, the Stockholm-based streaming platform’s stock was trading for north of $350 per share – putting the forecasted 2030 value at approximately $1,750 per share.
Spotify stock slipped substantially this week after the company released its much-anticipated Q4 2020 earnings report – including a tentative growth outlook for 2021’s first quarter. Nevertheless, it bears mentioning in the context of Guardian Fund’s long position on SPOT that the stock has more than doubled in value (at the current, lower price) since arriving on the public market in 2018.
In other recent Spotify news, it came to light today that the platform had been hacked once again, and the login specifics associated with 100,000 accounts were leaked. The service also debuted in South Korea this week – albeit without an ad-supported version – and remains engaged in a high-profile courtroom confrontation with Eminem publisher Eight Mile Style.