Former Spotify CFO Barry McCarthy, who led connected fitness company Peloton through the difficult post-pandemic period, is selling $10 million worth of Spotify stock.
McCarthy, who currently serves on Spotify’s board of directors, is selling, according to a filing with the U.S. Securities and Exchange Commission on Wednesday (June 5). 30,750 Spotify common stock.
That’s less than one-tenth of McCarthy’s stake in Spotify. According to the company’s 2023 annual report, McCarthy holds 381,797 Spotify stock as of December 31, 2023, and 15,033 Stock options.
McCarthy continues to serve as a director on Spotify’s board of directors, a position he held in January 2020, around the time he resigned as Spotify’s chief financial officer.
He resigned as Peloton CEO in May, the same day the company announced another round of cost cuts that included layoffs affecting employees. 15% its labor force, or 400 people.
along with names like wayfel and skyrocketingPeloton has become the poster child for businesses whose fortunes soared during the Covid-19 pandemic, only to plummet when consumer habits returned to normal post-pandemic.
Peloton, worth it US$8 billion At the time of its 2019 IPO, the company’s stock soared as consumers began snapping up the company’s exercise bikes and treadmills as gyms closed due to pandemic lockdowns. But as the pandemic recedes, Peloton’s fortunes have changed.
The company’s stock price peaked above the peak in December 2020 $160 per share and has since fallen by more than 97%the transaction price is approximately $3.80 As of Thursday (June 6). Its market value has fallen from highs $50 billionaround $1.4 billion.
McCarthy joined the board in February 2022 during the company’s decline, succeeding the founder and then-CEO from retirement John Foley Its compensation package is reportedly worth as much as $168 million.
However, almost all of these end with 800w Stock options, which McCarthy cannot exercise until the company’s stock price rises $38.77 — something that has never happened since he became CEO.
His initial annual salary was $357,692 USDalthough this quickly rises to $ 1,000,000.
As Spotify’s financial officer, McCarthy is known as one of the streaming service’s staunchest and loudest defenders of its business strategy, which focuses on growth rather than profit.
“You should expect us to continue to invest in growth at the expense of operating profits because we believe growth will increase the value of our enterprise,” he said in a 2018 speech.
McCarthy believes that “scale can be an important driving force for profit expansion.” He believes that building Spotify’s user base, including ad-supported user base, constitutes Spotify’s long-term path to profitability.
“Ad-supported business is also a subsidy program that offsets the cost of new subscriber acquisition,” he said, adding that “over time, more than one of every two free users will become a paying subscriber .
In 2017, when McCarthy was CFO, Spotify accomplished something almost unimaginable today: It convinced the three major record labels— sony, common and Warner – also Merlin Helping Spotify improve its struggling gross margin by reducing its share of net revenue.
“It’s not magic,” McCarthy explained. “Record labels are acting out of self-interest to shore up Spotify’s economically challenged profit structure, as a healthy Spotify becomes increasingly important to the entire music industry ecosystem.”
Today, Spotify’s strategy of focusing on scale over profits is changing—although arguably only McCarthy’s strategy has been largely successful. In the first quarter of this year, the paying user base was 239 million and 615 million monthly active users, the company posted its largest quarterly profit ever and appears to finally be on the path to annual profitability.
On the earnings call, C.E.O. Daniel Ek This shows that Spotify has shifted its focus towards profitability. To that end, the company has implemented efficiency measures, including multiple rounds of layoffs over the past few years.
Yet another cost-cutting measure has drawn the ire of the music industry: Spotify’s decision to “bundle” its premium subscriptions in the US with audiobooks, meaning it pays less mechanical royalties to songwriters and publishers , this move resulted in Machinery Licensing Collective (MLC) filed a lawsuit against the streaming service.global music business
