Spotify ((SPOT)) CEO Daniel Ek said he purchased $50 million of stock this week as shares of the company have tanked in 2022.
The music streaming and podcasting company's stock has plummeted by 63.57% since Jan. 3 when it was trading at $244.16.
Ek reiterated his confidence in the company that has faced challenges as it builds up its podcasting business.
"I’ve always been vocal about my strong belief in Spotify and what we are building," he tweeted. "So I am putting that belief into action this week by investing $50M in $SPOT. I believe our best days are ahead..."
Morgan Stanley said the purchase is viewed by investors as a "nice" gesture since his net worth is over $2 billion.
Ek said he was not required to disclose his stake, but wanted shareholders to be aware of his purchase.
"While I’m not required to disclose these purchases because of our foreign company status, I thought it was important for shareholders to know," he tweeted.
The company reported first-quarter revenue of 2.66 billion euros compared to estimates of 2.62 billion euros, per Refinitiv, which resulted in earnings of 21 euro cents per share compared to an estimated loss of 24 euro cents, per Refinitiv.
Spotify said its ads generated 282 million euros, consisting of 11% of total revenue. Analysts had expected 304.1 million euros in ad-supported revenue, according to FactSet.
The number of paid subscribers rose by 15% year over year, reaching 182 million. The company had forecast 183 million paid subscribers. Exiting Russia led to a loss of 1.5 milion subscribers. During the first quarter, Spotify reported 422 million monthly active users, an increase of 19% year over year, beating its own estimate by 4 million listeners.
By the end of quarter, Spotify reported 4 million podcasts on its platform, a slight increase from 3.6 million in the fourth quarter of 2021.
Spotify predicts it will reach 428 million monthly active users and 187 million total paid subscribers during the second quarter.
Analysts have downgraded their price targets of Spotify. Morgan Stanley lowered their price target to $225 from $300 while Canaccord Genuity Group reduced their price target to $250 from $300..
Truist Financial is even more bearish and lowered the target to $150 from $210.
In April Spotify launched its video podcasting and other video features to podcasters in the U.S., U.K., Canada, Australia and New Zealand.
The company has been working to share its revenue with more artists.
In 2021 the company said there were over 50,000 artists who generated over $10,000 in royalties with over 1000 artists who were able to produce $1 million in revenue, ek wrote in a blog post.
"Spotify represents 20%+ of global recorded revenue, so you can multiply these amounts by ~4 to estimate how much the artist is generating beyond just Spotify," he wrote. "In fact, the number of artists crossing every revenue threshold on Spotify (e.g., $10K, $100K, $1M, and even $5M) has more than doubled in the last five years."
