Spotify's stock market debut strikes a chord with investors

Ann Santiago
April 5, 2018

Spotify opened at $165.90 a share on the New York Stock Exchange.

The Swedish music streaming platform, Spotify, on 3 April will be publicly traded for the first following its initially U.S. market debut. Based on the total number of shares outstanding after the listing, Spotify has a market value of about $27.8bn.

Trading as SPOT, Spotify took the unorthodox step of listing existing shares directly on the bourse rather than issuing new stock, allowing its founders and early investors to maintain control. On a comparable basis the Apple Music service has 46 million subscribers.

It's especially hard to tell, though, how much money some investors made as Spotify rose, because Spotify has had such an extensive history of private stock sales between shareholders.

Spotify's listing was hotly followed, as it went public via the unusual method of a direct listing, without selling new shares. Netflix is worth about $122 billion.

In comparison, when Snap Inc, the parent company of Snapchat, went public in an IPO a year ago, it paid almost $100m to its team of underwriters. 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.

That means the $97.30 gain is exclusively to Sony, and was calculated after the company made royalty payments to artists and indie labels.

Founded in 2006 as a free-to-use service funded by advertising, Spotify is now the leading music streaming service.

Spotify shares closed 13pc on the reference price give ahead of its IPO yesterday.

Spotify CEO Daniel Ek declined an invitation to ring the opening bell at NYSE. "Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment", he said. As I mentioned during our Investor Day, our focus isn't on the initial splash.

'Like many tech companies Spotify comes with an exciting growth story and a few hazard signs too. Instead, we will be working on trying to build, plan, and imagine for the long term.

The venture capital unit of New York-based Tiger Global owns 12.8 million shares, or 7.2% of the company, according to a March 20 filing.

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