Spotify preparing to launch listing on the U.S. market share

05 April, 2018, 01:03 | Author: Barbara Daniel
  • Spotify — Tomorrow

The shares will simply float on the New York Stock Exchange, with no banks to mop up any excess stock, no-one to set the share price via the underwriting process and no-one to allocate shares to investors.

Spotify's debut on the New York Stock Exchange (NYSE) saw the company's share price rising as much as 13%, opening at $165.90 per share, later falling to $149.01 - still well above the reference price of $132.

Analysts' advice, however, is that companies are not to be misled by Spotify's first day on the market.

Spotify is pursuing an unusual direct listing to reach the public markets in place of an initial public offering, and shares are expected to start trading on Tuesday.

Technology stocks have been big on fanfare in recent years but have had mixed performances after listing, as the share price volatility for Snapchat, Tesla and Twitter have shown, but the Spotify listing was being seen as a test of investors' faith in its future prospects. The series G late stage venture financing round valued Spotify at $8 billion. Revenue of $5 billion previous year was up 39% from 2016. A list of other formidable competitors that includes Google and Amazon also offer similar music streaming services, raising the specter of Spotify being wiped out by far richer rivals. However, Apple doesn't rely on paid subscribers to earn a profit for Apple Music, as it has a huge retail family and consumer goods offering - products it can also use to push its streaming service to consumers.

Spotify Technology SA made its Wall Street debut in an unconventional way.

However, Spotify is now entwined in an increasingly competitive music-streaming business, where nearly all of its main competitors are owned by tech giants whose music-streaming services are not their core business.

The day before Spotify began trading on the stock market, CEO Daniel Ek published a post on the company's website in which he quoted Daft Punk. Our focus isn't on the initial splash. Instead, we will be working on trying to build, plan, and imagine for the long term.

This is a particularly attractive strategy for companies swimming in private funding, and could signal a viable approach for a number of other tech unicorns.

Spotify has filed a registration statement (including a prospectus) with the Securities and Exchange Commission ("SEC") relating to its ordinary shares.

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