Spotify IPO: Music-streaming startup hopes stock offering is a smash hit

Posted April 04, 2018

However, as The Guardian points out, it's hard to value the music streaming firm because in its 12 years of existence, it's never turned a profit, despite the fact that it now has 157 million listeners, of which 71 million are paying subscribers. The firm did caution that SPOTIFY's unusual direct listing could lead to "unusual trading dynamics in the days and weeks following the APRIL 3rd listing".

The company has structured the stock market listing to allow existing investors to sell directly to the public while offering no new shares of its own.

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

It now has 71 million so-called premium subscribers, including users who have given the company a credit card number for a free trial. "It opens the door to any unicorn out there that focuses on the consumer", Nicholas Colas, cofounder of DataTrek Research, said.

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The New York Stock Exchange had on Monday set the reference price for shares in Spotify Technology at $132.

"Apple is growing faster than Spotify and has a different business model whereby music does not have to be profitable on a standalone basis", he said.

The market is still awaiting Spotify's highly anticipated public debut as the streaming music service goes through with its unusual "direct listing".

One of the first people to spot the mistake was Sven Carlsson, a Swedish tech reporter who covers Spotify for Di Digital.

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Follow Spotify's movement on the NYSE.

But analysts pointed out the listing saved Spotify tens of millions in fees and gave employees and early investors a chance to cash out.

"Even with all the buzz that it's going to be a great tech IPO year, they're still few and far between", says James Gellert, CEO of RapidRatings, which rates the financial health of public and private companies.

Spotify has helped change the way much of the world listens to music by popularizing streaming - unlimited, on-demand songs online. "Normally, companies don't pursue a direct listing", Ek wrote in a public post. For example, the company didn't work with bankers to sell shares through institutional investors. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018. It is also not known at what price the stock will start trading Tuesday. That means that if the stock plunges, there is no big bank to prop up the share price with more share purchases.

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"In normal IPOs, the underwriters stabilize the price - they put a floor under the price below which the stock price won't fall, because the underwriters will buy it at that price".