Spotify Shares Make Debut in Choppy Markets

Lena Tucker
April 4, 2018

PARIS, FRANCE - JANUARY 06: In this photo illustration, the logo of the Swedish music streaming service Spotify is displayed on the screen of an iPhone on January 06, 2017 in Paris, France.

The European stock markets were dumped during the course of trading today as a follow up of the dump in the stock indices in the United States yesterday. "Such differences from an underwritten initial public offering could result in a volatile market price for our ordinary shares and uncertain trading volume and may adversely affect your ability to sell your ordinary shares".

Spotify has filed a registration statement (including a prospectus) with the Securities and Exchange Commission ("SEC") relating to its ordinary shares. The company says it is present in 61 countries and its platform includes 159 million monthly active users and 71 million premium subscribers.

In an interview with CBS This Morning, Ek said that while he would look at the stock price when it opened, he felt the company is only in the "second inning", emphasizing his focus on the long term.

Even with its daylong decline, SPOTIFY's closing price was well above the $132 reference price NYSE set on MONDAY (4/2), and the WALL STREET JOURNAL cites several analysts who predict higher prices in the future. Spotify is the biggest company to ever go public via direct listing, and the first on the NYSE.

Spotify declined to comment for this story citing the SEC mandated "quiet period", which restricts companies from making certain public statements during the going public process.

"One of the things that is driving a lot of the uncertainty, this range of valuations, is that the company is highly unprofitable, has a lot of major competitors and has few direct public peers", Matthew Kennedy, an analyst at IPO research provider Renaissance Capital, told CBS Moneywatch.

Ek said his company made a decision to skip the IPO phase because he wasn't interested in "the pomp and circumstance".

For its public offering, Spotify has taken an unconventional and somewhat risky approach called direct listing, a route normally taken by small-cap companies, usually in biotech and life sciences. A direct listing eliminates those restrictions and allows them to potentially profit from the IPO immediately. "While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company", CEO Ek said. The only problem was, they rose the flag of Switzerland instead. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018. 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.

Other reports by AllAboutTopnews

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