Spotify hits $26.5bn valuation in trading debut

05 April, 2018, 01:26 | Author: Juana Mckenzie
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The New York Stock Exchange on Monday set the reference price for shares of music streaming service Spotify Technology SA at $132.

In a research note sent to clients prior to the company's listing, Laith Khalaf, Senior Analyst at Hargreaves Lansdown, had said: "Spotify has chosen to simply dive straight into the New York Stock Exchange, rather than being lowered in gently by the usual consortium of investment banks". Based on the total number of shares outstanding after the listing, Spotify has a market value of about $27.8bn. Sweden's flag is blue and yellow.

Spotify and Tencent's music subsidiary announced a share swap in December, taking minority stakes in each other ahead of expected stock market listings this year.

This approach will save Spotify tens of millions of dollars in fees.

In the case of Spotify, it has opted for a so-called "direct listing".

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It closed at $149.01, a drop of more than 10 per cent but still above the pre-trading reference point - and ending the day with a value of $26.5 billion.

That's in contrast with an IPO, in which the company and potentially a few existing shareholders offer a set number of shares at a valuation they think the market will bear.

Those agreements with the big labels, though, aren't always good for the artists behind the music. Apple Music, the closest rival, in comparison has about 46 million subscribers. "Spotify has been a driving force in the turnaround of the USA recorded music industry over the past few years".

Personal details stored online are being hacked and then sold off - allowing the purchaser to access someone's subscription to Spotify for a tiny fraction of the above-board pricetag, says the Dark Web Market Price Index.

Like many other "unicorn" companies, Spotify has never posted profits.

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In contrast to last year's debut of social media group Snap, Spotify's top executives were not present at the NYSE to see their company go public for the first time.

Spotify CEO Daniel Ek declined an invitation to ring the opening bell at NYSE.

This is despite being the world's largest music-streaming service with 71 million paying subscribers, close to 160 million monthly listeners, and revenue of almost $US5bn in the past year, as it tries to cover costs, including the royalties it pays to record labels and artists.

Spotify (spot) already has two revenue sources, collecting advertising sales from its free service and subscription revenue from its premium service.

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