As of April 3, Swedish music streaming service Spotify is finally trading on the New York Stock Exchange under the ticker symbol SPOT. Spotify, unlike most other companies, did a direct listing, meaning that its shares are now available without any underwriting from investment banks.
Not only did it list directly, but also Spotify sold company shares owned by others and it live-streamed the investment presentation to the public instead of giving access only to Wall Street analysts. Talk about coloring outside of the lines.
Spotify CEO Daniel Ek commented on his company’s preparation to launch in last month’s investment presentation.
“For us, going public [has] never really been about the pomp or the circumstance of it all. So you won’t see us ringing any bells or throwing any parties,” said Spotify CEO Daniel Ek during last month’s investment presentation. “We want to be as transparent as possible and give everyone equal access to information about the company.”
This is notable for several reasons. For music lovers, Spotify’s growth has played a large part in slowing the overall music business’ decline in recent years. According to the Recording Industry Association of America, music sales in the U.S. rose 16.5 percent to $8.7 billion — much of this growth came from paid music streaming subscriptions, which topped $4 billion.
On its first day trading, the music service closed at around $149 per share, which means the company is now worth $26.5 billion. Spotify’s listing is the most valuable tech IPO (initial public offering, a.k.a. the very first sale of stock issued by a company to the public) since Snap went public last year, closing its first day at nearly $29 billion.
Spotify streams to 65 countries and territories, with 157 million monthly active users (MAU), of which 71 million are paying customers, according to the prospectus filed with the Securities and Exchange Commission.
“Very high global-aided brand awareness, relatively high customer satisfaction scores, and superior data-driven personalization all combine to help Spotify maintain its leadership position,” RBC Capital analyst Mark Mahaney said last week.
In comparison, Apple Music service has 38 million subscribers. In the U.S., Spotify claims 41 percent of the U.S. market share, beating out rival music services including Apple, Amazon, Pandora, Soundcloud and Tidal.
For the time being, stock and finance experts aren’t sure what to expect of Spotify’s stocks.
In addition to its current unpredictability, there are several reasons organizations such as Bloomberg and Forbes argue that consumers should consider holding off buying Spotify shares a couple being the fact that Spotify isn’t currently turning a profit and the company had a record-breaking small “float” (the percentage of a company’s total stock available to buy and sell) on opening day. Most experts agree Spotify’s real value is too hard to determine at this point.
“Investors probably would like to see that trade a little more and get some idea – because of the way it came to market — of what’s the real value for the company,” said Dave Chojnacki, market technician at Street One Financial.
However, Spotify doesn’t seem worried and is focused on going upwards and onwards.
“We see the world dividing into multiple platforms. Spotify is the only player that can work across all of them globally — Amazon in the home, Android in the car and iOS on the phone in the Western world. And Spotify can be accessed across all of it,” Ek said. “Some people say that Spotify is disrupting the music industry, but I think Spotify is really just part of the evolution of the music industry.”
Spotify’s mantra is “Music for Everyone,” and this novel financial move seems to reflect those values and ideals, for now at least.