Research

Spotify On Wall Street: Opens At $165.90, Closes Under $150

Spotify On Wall Street: Opens At $165.90, Closes Under $150

"The attraction of the music-streaming service probably lies in Spotify's strong market share and rapidly growing revenues", Khalaf said.

The Swedish company skipped a conventional initial public offering (IPO) and is listing shares directly on the New York Stock Exchange with few of the safeguards provided by investment banks that would normally manage the process. That puts the company value at $23.5 billion, and is on target with what CNBC reported last month when shares were traded on private markets were for as high as $132.50 a share. The company set a reference price of $132 ahead of the debut.

Multi-billion dollar tech companies who are looking to list without issuing new shares may be looking at Spotify's debut as a test case for the IPO alternative.

The company filed papers with the US Securities and Exchange Commission to go public in late February. If the rates hold, Apple Music will overtake Spotify by the summer.

The opening public price was determined by buy and sell orders collected by the NYSE from broker-dealers and a designated market maker's determination of where buy orders could be matched with sell orders.

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




Spotify chose the direct listing method in part to ensure that employees and longtime shareholders could sell stock on day one if they choose.

A $10,000 investment in Netflix's 2002 initial public stock offering would now be worth more than $2.6 million, leaving some investors wondering if Spotify might be on a similar trajectory in music streaming.

As of January, Spotify had 70 million subscribers, compared with Apple Music's 36 million.

Spotify's IPO has been unconventional by most industry standards. The opening price puts the company's value at almost $30bn, making it one of the largest U.S. listings for a tech company in history. Under his watch, Stockholm, Sweden-based Spotify has weathered its share of controversies, including tussles with powerhouse artists like Taylor Swift over how much they are paid for their work. But what's even more important to me is that tomorrow does not become the most important day for Spotify.

"Spotify is floating on the stock market at a pretty inauspicious time for the tech industry, which has been rocked by the Facebook data scandal and now potentially faces greater regulation as a result", said Laith Khalaf, senior analyst, at Hargreaves Lansdown.

"If the stock is choppy when it takes off the stabilization agent attempts to create a floor of where the stock price could go", said Lise Buyer, an IPO consultant with Class V Group in Silicon Valley.


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