Music streaming platform Spotify announced on Friday, August 20, 2021, that it is commencing a stock repurchase program beginning in the third quarter of 2021.
Spotify’s board has approved repurchases up to the amount of $1 billion, while a repurchase of up to 10 million of the firm’s ordinary shares have been approved at a general meeting of shareholders. Spotify’s market cap at the close of Thursday, August 19, 2021, stood at $39.24 billion, down by some $30 billion on its 2021 peak of $69.35 billion on February 19, 2021.
Friday’s buyback news has certainly rallied some shareholder confidence in SPOT: its share price is up by over six per cent on the New York Stock Exchange at the time of publication.
Spotify said that the timing and actual number of shares repurchased will depend on a variety of factors, including “price, general business and market conditions, and alternative investment opportunities.” Spotify added that the repurchase program would be “executed consistent with the company’s capital allocation strategy, which will continue to prioritize aggressive investments to grow the business.”
At the close of calendar quarter two, according to SEC filings, Spotify was sitting on €2.44 billion (approximately $2.85bn) in cash and cash equivalents. Discussing the new buyback program, Paul Vogel, chief financial officer, Spotify, said:
This announcement demonstrates our confidence in Spotify’s business and the growth opportunities we see over the long term. We believe this is an attractive use of capital, and based on the strength of our balance sheet, we continue to see ample opportunity to invest and grow our business.