Since launching its streaming music service a decade ago, the Stockholm-founded company has overcome heavy resistance from big record labels and some major music artists to transform how the industry makes money. Spotify is the biggest company to ever go public via direct listing, and the first on the NYSE.
Unlike most companies that float, Spotify is not issuing any new stock, which means it has not set a price for its shares in advance. A list of other formidable competitors that includes Google and Amazon also offer similar music streaming services, raising the specter of Spotify being wiped out by far richer rivals.
The opening public price will be determined by buy-and-sell orders collected by the NYSE from broker-dealers, the exchange said.
The industry has returned to growth since 2015 driven by streaming service revenue, which now accounts for 60 percent of recorded music sales, according to market estimates. Swift famously removed her music from Spotify and other streaming services in 2014 but made her back catalog available to them once again previous year.
User numbers are expected to increase from 157 million to 170 million this year, with paying subscribers slated to increase from 72 million to 90 million.
"Everybody is going to watch what will happen with Spotify", said Columbia Law School professor John Coffee, who focuses on securities regulation.
If it goes well, other highly valued tech firms expected to pursue a listing in the future, with the likes of US ride hailing companies Uber Technologies and Lyft, could look to adopt a similar approach.
Spotify can eschew a traditional IPO because it does not require fresh capital and is a popular consumer brand about which the investors do not need educating through a road show.
In a standard IPO, a company hires investment bankers to pitch the stock to new investors.
January 2018 - Spotify says has 70 million paid-up subs.
The direct listing could result in wild swings in Spotify's stock pricing during the first few days of trading, especially since Spotify's shares have sold in a range of $48.93 to $132.50 in privately negotiated transactions during the first 11 weeks of this year. Instead, company insiders and investors will be selling their existing stock. "There's really no difference between a direct listing and Day 181 of a lockup". "In the short term, they are the ones benefiting" from a public debut.
Wall Street could go far in securing the Swedish startup's status as a success story if the listing goes well.
Wall Street offered a timely reminder of the volatility that can affect firms reliant on the promise of things to come, as electric vehicle firm Tesla's shares slumped almost 7% in early trading on Monday. Nobody knows what the price will be when the stock starts trading. The stock market has also been volatile recently with the Dow Jones industrial average falling more than 450 points, or almost 2 percent, Monday. "But what's even more important to me is that tomorrowdoes not become the most important day for Spotify", Ek adds.
"What if Apple decided: let's throw ten billion at this and see if we can throw Spotify out of the water?"
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