Spotify (SPOT) Rose Due to Favourable Trends

Soumya Eswaran

Wed, Apr 16, 2025, 8:29 AM 3 min read

Fred Alger Management, an investment management company, released its “Alger Spectra Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, changing trade, monetary, and fiscal policies created increased volatility in U.S. stocks. The introduction of advanced artificial intelligence (AI) models from China was a further source of uncertainty.  Against this backdrop, the fund’s Class A shares underperformed the Russell 3000 Growth Index in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first quarter 2025 investor letter, Alger Spectra Fund emphasized stocks such as Spotify Technology S.A. (NYSE:SPOT). Headquartered in Luxembourg City, Luxembourg, Spotify Technology S.A. (NYSE:SPOT) offers audio streaming subscription services. The one-month return of Spotify Technology S.A. (NYSE:SPOT) was -2.36%, and its shares gained 94.97% of their value over the last 52 weeks. On April 15, 2025, Spotify Technology S.A. (NYSE:SPOT) stock closed at $572.39 per share with a market capitalization of $117.172 billion.

Alger Spectra Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its Q1 2025 investor letter:

"Spotify Technology S.A. (NYSE:SPOT) is a leading global streaming platform providing users access to an extensive library of music, podcasts, and other audio and video content. The company primarily generates revenue through its Premium subscription service, offering ad-free listening, offline access, and enhanced audio quality, and also from its ad supported free tier, where advertisers reach Spotify’s large user base. By recently integrating AI, Spotify enriches user experiences with personalized features such as AI Playlist and AI DJ, tailoring content specifically to individual preferences. We believe this strategic use of AI, combined with its expansion into various audio formats, positions Spotify for sustained growth in the evolving digital audio market. During the quarter, shares contributed positively after the company reported better-than-expected fiscal fourth-quarter results driven by strong user growth and margin improvement due to favorable trends in audiobooks and music content costs."

A person wearing headphones listening to an audio streaming service.

Spotify Technology S.A. (NYSE:SPOT) is in 25th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 101 hedge fund portfolios held Spotify Technology S.A. (NYSE:SPOT) at the end of the fourth quarter compared to 98 in the third quarter. While we acknowledge the potential of Spotify Technology S.A. (NYSE:SPOT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.