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Spotify files its long-awaited public offering, a direct listing as expected

After many hints, signals, and seeming delays, Spotify has filed for a public listing on the New York Stock Exchange, hoping to raise one-billion dollars. Spotify will trade on the NYSE as the ticker symbol SPOT.

As expected, this is a so-called direct listing, which eliminates the traditional process of investment banks managing the launch and establishing an opening share price.

Spotify is the global leader of on-demand audio services. Alongside that interactive platform Spotify operates an ad-support internet radio service. The brand serves over 140-million users in 60 countries, about half of whom pay to subscribe monthly, unlocking extensive music collection and offline listening features. Spotify is the leading subscription music service, spearheading a type of cloud-based music access which has profoundly changed the music industry’s economics.

In 2017 the Sweden-based company took in five-billion dollars in top-line revenue. The company has never been profitable, but in 2017 revenues grew at a higher rate (about 25% year-over-year) than losses (about 8%). Paying subscribers grew at a 46% year-over-year rate.

Because of the direct listing, there is no process of building a trading book, thus no price of initial shares (which traditionally is set by investment houses selling their own shares to the public). We have not seen a trading date set, but it will follow the registration filing being “declared effective,” according to Spotify.

More on this as it develops.

 

Brad Hill

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