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Spotify's stock market debut strikes a chord

05 April, 2018, 00:42 | Author: Melinda Barton
  • A banner with the Spotify logo on it is seen as the company lists its stock on the New York Stock Exchange in New York United States

Spotify Technology SA made the debut on Wall Street using "direct listing" on the New York Stock Exchange that allows the company's early investors and employees to sell as many shares as they want whenever they want. They soon fell back a bit to $149 (£106) a share, but that still valued the company at $26.5 billion (£18.8 billion).

Tomorrow, Spotify becomes a listed public company on the New York Stock Exchange.

Its first true public valuation based on share supply and demand was the open price of $165.90. Before trading, previous financial disclosure showed that sony had 5.707 percent of Spotify's 178.11 million outstanding shares.

In one of the largest public offerings ever in the tech sector, Spotify on its first day topped the market capitalization of other high-profile recent market entrants, including Twitter, Snapchat parent Snap and Dropbox.

Less certain for investors, however, is Spotify's profitability.

Also, eMarketer analyst Paul Verna said that although it may be unfair on a company that has just entered the market, the tech sector is facing problems after Facebook's data theft scandal.

It warned last week that its sales growth was likely to slow this year, although it still expected to post a narrower annual loss.

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.

Note: To keep the quiz interesting, we've removed generic identifying words from the names of some streaming services, such as "radio" or "music".

Spotify will be hoping to replicate the market success of Netflix, its film and television counterpart, which has also prioritised adding users over profit margins.

What's unusual about Spotify's direct listing on the stock market this week is that company insiders are not required to hold onto their shares - in what's called the lock-up - for an extended period of time. "We are about twice the size of them", he said.


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