Spotify co-founders rake in $900m as stock soars

• Published On: 28 December 2024 at 07:29

Spotify co-founders Daniel Ek and Martin Lorentzon have received a combined $900 million in stock payouts this year, following a remarkable increase in the streaming giant's market value, which has approached $100 billion.

This rise represents an extraordinary recovery from previous years, when the company's valuation fell below $20 billion.

According to SEC filings, Spotify's senior executives and board members sold a total of $1.25 billion in stock during 2024. These stock sales, which occurred primarily in November and December, highlight the financial benefits for Spotify's leadership, as the company's share price tripled.

Spotify CEO Daniel Ek sold nearly $350 million in shares, including a notable $28 million in a single December transaction. Bloomberg now estimates Ek's net worth at more than $7 billion. Lorentzon, who remains on Spotify's board, sold more than $550 million in stock, cementing his position as one of the world's wealthiest corporate executives.

Other executives benefited from the increase in Spotify's stock price. Chief Product Officer Gustav Söderström sold $106 million in stock, and Chief Business Officer Alex Norström sold $63 million.

Spotify's stock resurgence is largely due to a renewed focus on profitability. Following significant layoffs in 2023 and price increases across multiple markets, the company has reported quarterly profits in 2024 without sacrificing subscriber growth.

This approach has not gone unnoticed by Wall Street. Bank of America analysts praised Spotify for its "incredible" profit margin improvements, while Morgan Stanley highlighted its shift from a growth-driven company to one focused on "emerging profit opportunities."

Spotify's turnaround has positioned the company alongside streaming behemoths like Netflix, with both now regarded as the dominant players in the streaming wars. The company's ability to balance profitability and growth has been critical to its success, allowing it to emerge as a dominant player in the industry.

Spotify insiders' stock sales were a mix of pre-planned divestitures and spontaneous transactions. A company spokeswoman explained that the sales were part of long-term financial planning for executives, the majority of whom are compensated heavily in company stock.

Spotify's board members also benefited from the financial windfall. Ted Sarandos, CEO of Netflix and a Spotify board member since 2016, sold $6 million worth of Spotify shares this year, further adding to the significant wealth generated by the company’s successful year.