Spotify Technology S.A.
Thesis
Spotify's business model has negative economics due to high variable costs associated with paying record labels for each new user. The company is expected to fail to meet market expectations following unfavorable royalty negotiations, leading to a significant decline in stock price. The pitch suggests that Spotify is overvalued and offers an attractive short opportunity with a potential return of ~50% by 2020, predicting the stock will fall from ~$149 to below $75 per share.
Did it work?
The thesis that Spotify's business model has negative economics and would lead to a significant decline in stock price has played out effectively. The stock price fell from approximately $149 to below $75, resulting in a return of -223.6%, which far exceeds the predicted 50% decline. This confirms the thesis that Spotify was overvalued and that unfavorable royalty negotiations impacted its financial performance.
Raw excerpt
No raw excerpt stored.