Published: Thu, April 05, 2018
Research | By Clarence Powell

Spotify soars to value over $26 billion in stock debut

Spotify soars to value over $26 billion in stock debut

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

He noted that Spotify has been able to hold its own, maintaining 36 percent of the subscriber market despite the onslaught of Apple.

Morris is feeling quite bullish on Spotify's future prospects, and he points to the fact that the streaming music service offers up "convenience, curation, breadth of content, and payment options" for users.

Eric Schiffer, CEO of the Patriarch Organization, argues that Spotify's initial stock valuation is far too high and should settle below $100 in the coming weeks.

The company even chose Scandinavian minimalism for the listing - no executive turned up to fly the company's flag for the debut, and it turned down the tradition of new companies ringing the opening bell at the New York Stock Exchange.

The shares will simply float on the New York Stock Exchange, with no banks to mop up any excess stock, no-one to set the share price via the underwriting process and no-one to allocate shares to investors.

Tiger Global's $11 billion venture capital business, led by Lee Fixel, started its investment in Spotify in 2015 and expanded it into one of the unit's biggest positions, the person said.

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The Swedish company took an unconventional route to the market, with early investors selling their holdings and no new shares being issued.

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.

Analysts' advice, however, is that companies are not to be misled by Spotify's first day on the market.

Spotify allowed Citadel Securities to open a price based on buy and sell orders.

The unusual listing had added to the suspense over how Spotify would fare on the market as the company, while big on its cool factor, has yet to turn a profit. Normally, companies don't pursue a direct listing.

It has around 80m more users than its nearest rival, Apple Music, and 25m more paying customers, but posted a loss of €1.23bn previous year on revenues of €4bn.

As of December, Spotify revealed it had more than 71mn paying subscribers alongside 159mn monthly active listeners, driving its revenue that reached just short of $5bn in 2017.

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