Spotify Technology S.A.
Thesis
Spotify is a good product but a bad business due to its high payout to record labels and increasing competition from major tech players. The company pays out 52% of its revenue to the Big Three record labels, which control the majority of the market. This, combined with low barriers to entry for competitors, suggests significant downside potential for Spotify's stock.
Did it work?
The short thesis anticipated significant downside for Spotify, but the -253.2% figure represents the short position's loss, implying the stock roughly tripled or more since the pitch. Over the ~6.7 years elapsed, Spotify sustained user and revenue growth, raised prices, improved gross margins, and reached profitability, invalidating the 'bad business' framing despite the persistent ~52% label payouts and tech competition. The thesis dynamics were decisively broken, and the direction of the trade was wrong.