The Swedish music-streaming platform, launched in 2008, which conquered its home country before moving onto the United States and then the rest of the world, made its stock market debut on April 3rd 2018. Spotify opted for a direct listing, more simple and less expensive.
Daniel Ek, CEO, co-founder and now shareholder in the firm, is credited with reviving the music industry and making Spotify the only European media group to have a truly global influence. With 71 million paying subscribers, the Swedish firm made over $4.8 billion in earnings in 2017 but has never actually technically generated a profit. In a message attended for his employees, the young CEO emphasized the importance of this day for the firm but also assured that it “will not change who we are.”
An unusual listing
For their entry onto the New York Stock Exchange (NYSE), the company chose a direct listing. Unusual and rarely-used, this form of initial public offering (IPO) does not require an intermediary and implies that they will not be issuing any new stock. The sole drawback is that share prices have not been fixed in advance, meaning they will remain hard to predict. Nevertheless, the NYSE has set a guide price of $132. The Swedish platform could be valued at between 20 and 25 million dollars. This direct listing could allow Spotify to make a saving of $300 million, according to the think tank SharesPost, which is specialized in startups. Employees of the firm could also recover cash flow by selling their shares.
However, shares in technology are not currently in peak condition, especially since the Cambridge Analytica scandal. It’s a somewhat unfavorable situation which could have a negative influence on Spotify’s stock exchange debut. Ambitious, the firm is predicting a 20-30% rise in revenue, which should range from 4.9 to 5.3 billion euros in 2018. Daniel Ek is also aiming to lower the firm’s operating loss (which was at 378 million euros in 2017), to between 230 and 330 million euros for the current year. This IPO could allow the platform to finally become profitable.
Original article by Morgane Al Mardini
Translated from French by Eloise Lake