Shares of music streaming giant Spotify (SPOT) declined by over 5% on Tuesday after revealing a major leadership change. Founder Daniel Ek will step down as CEO by the end of the year, transitioning into the role of Executive Chairman. Also, longtime Spotify executives Gustav Soderstrom and Alex Norstrom will take over as co-CEOs.
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The reshuffling comes as Spotify rapidly expands beyond music into podcasts and audiobooks. Also, it reported its first full year of profitability in 2024 after raising prices.
New Chapter for Spotify
Ek, who co-founded Spotify in 2006, said the move reflects how the company has already been operating behind the scenes. He said, “Over the last few years, I’ve turned over a large part of the day-to-day management and strategic direction of Spotify to Alex and Gustav–who have shaped the company from our earliest days and are now more than ready to guide our next phase.”
In his new role, Ek will focus on long-term strategy, capital allocation, and mentoring the leadership team. Spotify described the shift as a European-style chairman setup, where Ek remains deeply involved in shaping the company’s future.
The move to a co-CEO structure is meant to help manage its globally diversified operations more effectively. It must be noted that this structure has also been adopted by other large firms recently, such as Oracle (ORCL), Comcast (CMCSA), and Netflix (NFLX).
Soderstrom, currently chief product and technology officer, will oversee global tech strategy and product development in his new role. At the same time, Norstrom, currently chief business officer, will manage the company’s subscriber, advertising, music, podcast, and audiobook businesses.
Both co-CEOs will report to Ek, and their appointments are subject to shareholder approval.
Is SPOT Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SPOT stock based on 22 Buys and seven Holds assigned in the past three months. Further, the average SPOT price target of $773.14 per share implies 12.29% upside potential.
