Rowan Street Capital's Views on Spotify (SPOT)

By Soumya Eswaran | October 23, 2025, 11:29 AM

Rowan Street Capital, an investment management company, has recently released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund remained unchanged in the third quarter (+0.22%), making the YTD returns through September 30, 2025, to +20.4% net of fees compared to the S&P 500’s +14.8% year-to-date gain. Over the past three years, the firm’s capital compounded at approximately +54.2% annually (net), delivering a +266% cumulative return — more than doubling the S&P 500’s +24.9% annualized gain over the same period. The fund’s performance was driven by its commitment to process refined through years of experience, mistakes, and reflection. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Rowan Street Capital highlighted 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 -3.35%, and its shares gained 83.89% of their value over the last 52 weeks. On October 22, 2025, Spotify Technology S.A. (NYSE:SPOT) stock closed at $675.62 per share, with a market capitalization of $136.96 billion.

Rowan Street Capital stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its third quarter 2025 investor letter:

"Spotify Technology S.A. (NYSE:SPOT) has been part of our portfolio for more than seven years — a holding period that we aim for when we make an initial purchase. While we’ve sold approximately 85% of our original position over time, Spotify has delivered a long-t internal rate of return (IRR) of roughly 13%. Our IRR calculation reflects the true, ca weighted compounding of capital — incorporating all capital invested, proceeds from partial sales, and the current market value of remaining shares. At one point, Spotify represented more than 20% of the portfolio, but over time we concluded that the strength and durability of its moat did not justify such a large weighting. Much of t realized capital from those trims was redeployed into new ideas such as Adyen, Din Polska, and most recently Tesla, which we’ll discuss later in this letter. Today, Spotify remains a meaningful 7.8% position — a level more consistent with our view of its competitive advantages and long-term prospects.

Jim Cramer Recommends Buying Spotify (SPOT) Shares During “Periodic Moments of Underperformance”

Spotify Technology S.A. (NYSE:SPOT) is in the 25th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 111 hedge fund portfolios held Spotify Technology S.A. (NYSE:SPOT) at the end of the second quarter, up from 106 in the previous quarter.  While we acknowledge the potential of Spotify Technology S.A. (NYSE:SPOT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Spotify Technology S.A. (NYSE:SPOT) and shared the list of best stocks to buy according to Jim Simons’ Renaissance Technologies. Spotify Technology S.A. (NYSE:SPOT) detracted from Artisan Mid Cap Fund's performance in Q3 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.

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