Rowan Street Capital’s Views on Spotify (SPOT)

Core Insights - Rowan Street Capital's third-quarter 2025 investor letter indicates a stable fund performance with a +0.22% return for the quarter and a year-to-date return of +20.4%, outperforming the S&P 500's +14.8% [1] - Over the past three years, the fund has achieved a cumulative return of +266%, significantly exceeding the S&P 500's +24.9% annualized gain [1] Company Performance - Spotify Technology S.A. (NYSE:SPOT) has shown a one-month return of -3.35% but has gained 83.89% over the last 52 weeks, closing at $675.62 per share with a market capitalization of $136.96 billion on October 22, 2025 [2] - Spotify has been part of Rowan Street Capital's portfolio for over seven years, with a long-term internal rate of return (IRR) of approximately 13%, despite selling about 85% of the original position over time [3] Investment Strategy - The fund's current position in Spotify is 7.8%, reflecting a more balanced view of its competitive advantages and long-term prospects, down from a peak of over 20% [3] - The capital realized from trimming Spotify's position has been redeployed into new investments such as Adyen, Din Polska, and Tesla [3] Market Sentiment - Spotify ranks 25th among the 30 Most Popular Stocks Among Hedge Funds, with 111 hedge fund portfolios holding its shares at the end of Q2 2025, an increase from 106 in the previous quarter [4] - While acknowledging Spotify's potential, there is a belief that certain AI stocks may offer greater upside potential and less downside risk [4]