Spotify announces $1bn stock buyback plan

Loss-making streaming company takes advantage of recent tech share sell-off

Shares in Spotify fell more than 7 per cent over two days last week over its weak Q3 figures. Photograph:   Lionel Bonaventure/AFP

Shares in Spotify fell more than 7 per cent over two days last week over its weak Q3 figures. Photograph: Lionel Bonaventure/AFP

 

Spotify announced plans on Monday to buy back as much as $1 billion (€877 million) of its shares as the music streaming company looks to take advantage of the recent sell-off in its stock.

Shares in Spotify fell more than 7 per cent over two days last week after the company disappointed investors with its third-quarter subscriber growth and offered a muted outlook for the fourth quarter.

The stock has not been immune from the market rout that has swept the technology sector in recent weeks and is down 30 per cent since hitting a record high of $198.99 in late July.

Direct listing

Spotify made its debut on the public markets in April through a direct listing, as opposed to the traditional initial public offering process that is used by most companies.

But unlike other companies that have been announcing share buybacks, Spotify remains loss making. It posted an operating loss of 6 million on sales of €1.35 billion and free cash flow of $33 million (€28.9 million) for the three months to end of September.

Spotify said the buyback programme will expire on April 21st, 2021.

Shares in Spotify fell 0.6 per cent in opening trade. They had been up by as much as 2.8 per cent in pre-market trading.

– Copyright The Financial Times Limited 2018