Spotify’s slow ride toward going public has hit some unexpected bumps in the road. After much speculation that the streaming service would seek an IPO, the new trajectory appears to be a direct listing on the New York Stock Exchange. However, both investors and regulators have started reacting to this new business plan, indicating that a direct listing may not be the clear-cut action the company hoped.
First, regulators from the S.E.C. reportedly met with Spotify’s senior leaders last month. Unnamed sources familiar with the situation told Bloomberg that the the regulator was looking for more details about the direct listing plan, and that Spotify has continued communication with the S.E.C. since that meeting. The agency has not commented on the meeting, and it is unknown what the two parties have discussed.
If the plan for a direct listing does move forward, it would be a first for the NYSE and the biggest to date for the Nasdaq Stock Market. The number of public companies in the U.S. has declined over the past two decades, and it’s unclear how drastic an action the S.E.C. would be willing to take in order to increase those numbers.
The second development around the streaming service is that hedge fund Goldman Sachs Investment Partners has reportedly sold more than $75 million in Spotify stock. According to Sky News, the sale represents less than half of GSIP’s stake in the company. Goldman Sachs still plays a role in determining Spotify’s future, as the company hired it to advise Spotify about its plans to go public.
GSIP isn’t the first backer to be changing its relationship with the music company. Sky News reported last week that another backer, TPG Capital, is also seeking talks with Spotify regarding the terms of a $10 million bond. The bond was set to convert to equity when Spotify held an IPO, but its unclear how that conversion would be handled via a direct listing.
Although the direct listing path is the latest concept Spotify has talked about for going public, it has not confirmed whether it will embark on that plan. The final decision could depend on the results of its negotiations with other parties.