Spotify Becomes Publicly Traded Company with Multi-Billion Dollar IPO

Spotify Becomes Publicly Traded Company with Multi-Billion Dollar IPO

Spotify Becomes Publicly Traded Company with Multi-Billion Dollar IPO

"Even though Spotify's scale is about twice that of Apple Music, Apple has a huge ecosystem of products to market to". Now the streaming music service is worth almost $30 billion.

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 USA yesterday.

Unlike traditional IPOs, Spotify did not raise new capital. The company set a reference price of $132 ahead of the debut.

Based on those orders, the price was set based on a designated market maker's determination of where buy orders could be matched with sell orders. It's expected that the price discovery process will be over very soon, and at that point, the stock symbol will officially open up.

The unusual IPO process had analysts effectively throwing up their hands about what to expect after Spotify went public. Spotify had traded as high as $132.50 on the private market, according to a regulatory filing.

For Spotify, the direct listing process will save money by minimizing the role traditional Wall Street banks play in the process. These investors typically see the value of their shares rise quickly and sell them, pocketing a quick profit, he said.

But that could be bad news for those who invest once the company goes public.

This "novel method" for going public is the stock trading equivalent of opening a store and hoping people will just stop in.

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"This won't be replicated often", Kennedy says.

Silicon Valley is certainly watching. Venture Capitalist Bill Gurley shared his thoughts regarding the untraditional listing and potential valuations.

"Normally, companies ring bells", Ek wrote.

As of January, Spotify had 70 million subscribers, compared with Apple Music's 36 million. Shares for Facebook, Netflix and Google's parent company Alphabet also rose slightly today, following weeks of uncertainty. So far, none of have lived up to that title - though the competition remains fierce.

On Tuesday, April 3rd, dominant music sharing application Spotify began its first official day of being traded as a public entity.

That success hasn't come cheap. Among its direct music-streaming competitors, Spotify dwarfs Pandora Media (P), which has a market cap of $1.2 billion.

Bleeding money may not be enough to turn off investors, however. In that time, Spotify has been able to gather 157 million customers and has managed to covert 72 million of that number into paying users of their premium service. "Most companies do fall after their IPO, but the difference is that there is no underwriter to stabilize the price", he said.

Multi-billion dollar tech companies who are looking to list without issuing new shares may be looking at Spotify's debut as a test case for the IPO alternative.

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