Spotify's market value hovers at around $29B

Apr 04, 2018, 01:45
Spotify's market value hovers at around $29B

The stock began trading at $US165.90 a share shortly after noon, resulting in a valuation of roughly $US30 billion.

Spotify appeared to be bracing for a potentially rough ride on its first day of trading on Tuesday, following Monday's steep sell-off of technology stocks on Wall Street.

Spotify opened on the New York Stock Exchange at $165.90, giving the company a market value of $29.5 billion.

After initially spiking as high as $US169, shares eventually slid to close at $US149.60, according to Markets Insider data. It launched with a direct listing of shares, which removes the traditional role of investment banks, meaning existing Spotify shareholders can sell stocks directly to the public.

The direct listing by the Stockholm-founded company was the largest on record.

Boasting a subscription base of 71 million paying customers, Spotify is the the biggest streaming music service globally.

"The attraction of the music-streaming service probably lies in Spotify's strong market share and rapidly growing revenues", Khalaf said. With the company having been valued at $19 billion this past December, it was widely assumed that Spotify would be valued in the $22 billion to $25 billion upon going public. Estimates for the price of the shares once they hit the public market were between $160 and $220, CNN reported.

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Despite Spotify's significant posted loss in 2017, according to a blog post by founder and CEO Richard Ek, the company's public listing isn't about raising capital or an "initial splash".

"Normally, companies ring bells".

Spotify is focused on building its subscriber base.

The NYSE set Spotify's reference price late on Monday to be in line with informal, private trading of Spotify shares, giving an early estimate of the level at which supply and demand could be balanced.

"While this is obviously a big day and I'm really proud of my employees, I really just feel like we're in the early days, not celebrating the end days like so many other companies are doing", he said. This is an unusual IPO since Spotify has not hired any underwriters to help bring the company public.

The Guggenheim analyst summarized the likely investor debates about the stock this way: "It remains unclear if competitors can replicate the experience or leverage engineering and technology resources to develop a similar or superior offering".