Spotify hits $26.5bn valuation in trading debut

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However, the music streaming service is also facing questions over profitability and increasing competition from rivals, particularly from Apple Music, the music streaming service offered by consumer electronics giant Apple.

Spotify opted for a rare direct listing rather than a traditional initial public offering, which raised questions around its stock debut.

"They are getting all the funding they need in the private market and they don't really need to go public as early", he said. Based on the total number of shares outstanding after the listing, Spotify has a market value of about $27.8bn. "This approach will save the company money, but will probably lead to volatility when the stock starts trading, as the market tries to find a price it's comfortable with".

Most important of all is how the Spotify IPO will affect regular consumers - the listeners.

At the end of January Spotify was the largest of SMT's 39 unlisted holdings, with 1% of net assets valuing the stake at £65.6 million, up from £17.4 million in March 2016.

By comparison, Apple's almost 3-year-old music streaming service has 38 million subscribers. Apple, on the other hand, has 46 million on its music service.

"Investors are right to have some reservations".

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Spotify Technology SA made its Wall Street debut in an unconventional way. Alphabet Inc's Google does not release paid subscriber numbers for Google Play Music.

Reaching a valuation of $26.5bn, Spotify exceeded any expectation that anticipated the company to be worth between $20-25bn.

Spotify shares closed at $149.01 on the end of its first day of trading on the USA stock market yesterday (April 3), valuing the streaming service at $26.5 billion - more than Twitter and Snapchat.

Shares initially "popped" up to $165 (£118) on opening, way above its guide price of $132 (£93). Negative sentiment toward the IPO rose as the date approached and the expected trading price climbed, said Pierce Crosby, StockTwits director of business development, based in NY. The stakes owned by the other two big labels, Universal and Warner, were not disclosed but are believed to be 4 percent or less.

In a blog post published on the eve of the direct listing, Daniel Ek, Co-founder and CEO of Spotify, wrote, "Spotify is not raising capital, and our shareholders and employees have been free to buy and sell our stock for years".

The only visible hiccup came when the NYSE also briefly flew a Swiss flag in honor of the Swedish company, which the NYSE later described on Twitter as a "momentary ode to our neutral role in the process of price discovery".

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