Spotify Goes Public, Listed On NYSE

Spotify Goes Public, Listed On NYSE

The Swedish company skipped a conventional initial public offering (IPO) and is listing shares directly on the New York Stock Exchange with few of the safeguards provided by investment banks that would normally manage the process.

Spotify disclosed in a securities filing for the offering, "There could be greater volatility in the public price of our ordinary shares during the period immediately following the listing".

Even with its daylong decline, SPOTIFY's closing price was well above the $132 reference price NYSE set on MONDAY (4/2), and the WALL STREET JOURNAL cites several analysts who predict higher prices in the future.

Case in point: Dropbox, another mature but unprofitable billion-dollar tech company facing a similarly daunting list of rivals, is up more than 40% from its IPO last month. Spotify is the biggest company to ever go public via direct listing, and the first on the NYSE.

John Tinker, analyst at Gabelli and Co., kicked off assessments of Spotify by rating it a hold - advice neither to buy nor sell.

Spotify is basically trying to recreate the secondary market activity that happened before it went public. And it feels like the right time to pause and acknowledge the thousands of Spotify employees around the globe who helped build out the Spotify ecosystem while staying true to who we are and what we believe. Apple Music, however, was growing at a much faster rate than Spotify: 5% versus 2%. Apple Inc.'s music-streaming business and Inc.'s are also viewed as competitors to the Stockholm-based Spotify, which officially launched its business in 2008. Spotify lost about $1.5 billion in 2017, more than double its loss from the prior year. Spotify didn't creating additional shares for the IPO because it didn't need to raise money. Instead, company insiders and investors will be selling their existing stock.

This "novel method" for going public is the stock trading equivalent of opening a store and hoping people will just stop in.

"Spotify has been the driving force in nothing less than a turnaround in the USA recorded music industry", Verna said. Almost 91 percent of Spotify's 178 million shares were tradable, a much higher percentage than typical in a traditional IPO. The company is using a so-called direct-listing process.

Analysts had anxious ahead of Spotify's direct listing that forgoing hiring investment banks as underwriters or holding traditional promotional events with institutional investors could mean volatility once formal trading kicked off. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018. While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company.

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