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Rumor Fact(ory): Spotify IPO could be delayed to 2018

spotify logo april2016The timeline for Spotify’s long-anticipated IPO launch may have encountered another setback. Sources have told TechCrunch that the streaming company could push the IPO back to 2018. The unnamed sources said waiting yet another year would give Spotify time to have a stronger balance sheet and revamp its label licensing deals. A rep from Spotify declined to comment to the publication on this reported development.

A Spotify IPO has been in the works for years, and many moves by the streaming company in 2016 were laying clear groundwork to make progress toward that goal. It seemed that enough pieces might have been in place for a 2017 date, but that could have been an optimistic prediction yet again. A source told TechCrunch that the goal valuation for an IPO was between $11 billion and $13 billion. The most recent financial developments pegged Spotify’s worth as $8.53 billion.

“Three to five years ago, you could have an IPO based solely on user growth and promises of the future,” one source told TechCrunch. “But the financial climate has changed now. Today you have to show some path to profitability, especially at the valuation that Spotify has been targeting. That may have caught up with the company a bit.”

More music companies have been moving into the on-demand listening space, meaning Spotify is also facing increased competition in the niche that it once ruled. To be sure, Spotify remains the market leader in the freemium/subscription music service industry. Apple Music has quickly moved into the No. 2 spot (no freemium there), and it has the vast resources of the tech giant to experiment with. Pandora and iHeartRadio are both adding on-demand subscriptions to their lean-back listening products. The IPO question is contributing to a growing cloud of uncertainty around Spotify and how it will be able to convert its current market strength into a definitive business success.

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Anna Washenko

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