Tiger Global Management founder Chase Coleman (Trades, Portfolio) disclosed he established a 7.19% stake in Spotify Technology SA (SPOT, Financial) on June 6.
The tech investor, who was among the first to bet on Facebook (FB, Financial) and Snap (SNAP, Financial), is a former protégé of Tiger Management founder Julian Robertson (Trades, Portfolio). His firm typically buys stakes in companies based on trends it sees in certain sectors, often getting in during the early stages.
According to GuruFocus real-time picks, Coleman picked up 12.8 million shares of the Swedish music streaming service for an average price of $165.64 per share, giving the position 12.36% portfolio space.
The Stockholm-based company, which went public in April, has a market cap of $31.61 billion; its shares were trading around $171.83 on Monday morning with a price-book ratio of 20.40 and a price-sales ratio of 5.94.
According to GuruFocus, the stock has risen substantially from its closing price of $149.01 on its first day of trading.
In early May, Spotify reported earnings for its first quarter as a public company, posting a net loss of 169 million euros ($196.1 million) on 1.14 billion euros in revenue. Revenue was in line with analyst expectations.
The company recorded 170 million subscribers, of which 75 million were paid subscribers. This was also in line with estimates.
Spotify’s financial strength was rated 7 out of 10 by GuruFocus, boosted by its cash-debt ratio, which outperforms the majority of its competitors, and high Altman Z-Score of 8.04, which indicates it is financially secure.
The company’s profitability and growth did not fare as well, scoring 3 out of 10. While its margins and returns are negative, they are still outperforming the majority of its peers. GuruFocus warns, however, that Spotify has poor earnings quality with a Sloan ratio of -26.14%, which indicates its earnings are likely made up of accruals. Spotify also has a Piotroski F-Score of 4, which suggests its operations are normal for a stable company.
According to GuruFocus, Coleman is currently the only guru invested in Spotify. So far, he has made an estimated gain of 5% on the investment. Technology stocks make up 32.8% of his $15 billion portfolio.
Disclosure: No positions.
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