Today, Spotify (SPOT) announced a 17% cut to their workforce. The CEO, Daniel Ek, sent an email to its staff, explaining the reasoning for his move: the company wanted to significantly reduce its team size as a “hard but crucial step towards forging a stronger, more efficient Spotify for the future”. Indeed, he said that Spotify was taking a fundamental action to reduce costs, and added that the company took on way too many employees in 2020 and 2021, when capital was cheap and team expansion was an attractive investment. The music streaming service aims at being the world’s leading audio company. In order to pursue this goal it must adopt some specific strategies. Even though Spotify is already a monolith of the music industry, its economic growth has slowed dramatically and capital has become unsustainably expensive. Therefore, the firm is strategically orienting towards a leaner structure, which will lower costs and make more cash available for investments and future endeavors. Investors applauded Daniel Ek’s decision, with SPOT soaring 7.46%.
Another company positively benefitting from news this weekend is Uber Technologies (UBER): its stock has neared record high after Friday’s news of an inclusion in the S&P 500, scheduled for December the 18th. Uber’s recent financial results show its strengthened position, thanks to the successful strategic adjustments adopted by the company, aimed at improving EBITDA and expanding its profit margins, especially from its delivery services. The ride-hailing giant reported net income of $221 million in the third quarter, on revenue of $9.29 billion.
Author: Ilaria Savignoni