Spotify's shares open at $165.90 valuing the music streamer at $29 billion

04 April, 2018, 01:44 | Author: Lora Ball
  • Spotify has said it chose a direct listing because it doesn’t need to raise more money. It also says the process is fairer to investors

Global music-streaming giant Spotify Technology SA made its debut on the New York Stock Exchange Tuesday afternoon. On Tuesday, April 3. music-streaming pioneer Spotify plans an initial public offering of stock. That was down 10 percent from the initial trading price.

The unusual IPO process had analysts effectively throwing up their hands about what to expect after Spotify went public. Spotify is the largest company to have ever taken a direct listing, and it is the first to do so on the NYSE. "So while tomorrow puts us on a bigger stage, it doesn't change who we are, what we are about, or how we operate". The Swedish company's use of a "direct listing" allows its early investors and employees to sell as many shares as they want whenever they want.

The Stockholm-based company began streaming music about 12 years ago but still hasn't made a profit as it pays out royalties to musicians for the privilege of sharing their music.

Spotify now has a higher market value than Snapchat owner Snap Inc (SNAP.N), which went public previous year. I think she saw that fans were asking for it. "Spotify is from the costs of licensing content", said Michael Carvin, chief executive of personal finance technology firm SmartAsset.

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".

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Revenue is also a key factor in determining share values, and this is an area where Spotify will have a lot to prove.

Some investors are concerned that Spotify will run the course of competitor Pandora, which has struggled as a public company, partly due to hefty artist fees.

Since its launch in October 2008 Spotify has gone on to generate revenues of $8.7bn with streaming revenue alone accounting for 65% of that total, an increase from just 45% of the total from as recently as 2016.

There has been a surge of tech IPOs over the last few months, and there are several major companies that have either already filed their paperwork or are rumored to be filing soon.

On the morning of the day his company goes public - the big day that he has long insisted isn't that big compared with "the day after, and the following day and all those days to come" - Spotify cofounder and CEO Daniel Ek looked forward and back in an appearance on "CBS This Morning".

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