Spotify Technology SA on Tuesday completed the largest-ever direct listing, valuing the world's leading streaming music service at as much as $30 billion, but its shares stalled after an early spike. The only problem was, they rose the flag of Switzerland instead.
Boasting a subscription base of 71 million paying customers, Spotify is the the biggest streaming music service globally.
Global recorded music industry revenue in 2014 had fallen by 40 percent to $14.3 billion from $23.8 billion in 1999, when the rise of music file-sharing service Napster ravaged sales of CDs. The price first settled at around $160, then continued to slowly fall until closing at $149.01 with over 28.66 million shares sold.
The company has structured the stock market listing to allow existing investors to sell directly to the public while offering no new shares of its own.
2012, at the Pre-Grammy Gala & Salute to Industry Icons with Clive Davis honoring Richard Branson, in Beverly Hills, Calif. Spotify stock debuted on the market with a boom, opening at $165.90 in an unusual "direct listing".
The company's listing comes at a hard time for the tech industry, with shares of major companies like Facebook and Amazon tumbling in recent days. And it feels like the right time to pause and acknowledge the thousands of Spotify employees around the globe who helped build out the Spotify ecosystem while staying true to who we are and what we believe. The company is using a so-called direct-listing process.
If successful, Spotify could become a roadmap for the array of multi-billion dollar tech companies, investors are now hoping will go public soon, including Airbnb, Lyft and Uber. "Most companies do fall after their IPO, but the difference is that there is no underwriter to stabilize the price", he said.
"That is why Wall Street doesn't want direct listings to be common". These customers have come to expect preferential treatment in large market debuts, he said. In addition, Spotify made a commitment to their original investors over a decade ago that they will be able to profit from their investment and this seems like the flawless opportunity. But what's even more important to me is that tomorrow does not become the most important day for Spotify. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018. It entered the NYSE with a reference price of $132, so Tuesday was much higher than that. "It is definitely not a normal IPO".
This post will be updated when Spotify begins trading. It will not have some of the safeguards traditionally provided by investment banks, which try to prevent new stock from following below a certain price. "The biggest risk is we don't know where these shares are going".