Spotify Founders Enriched to the Tune of $5.8 Billion in Listing
Spotify Founders Enriched to the Tune of $5.8 Billion in Listing
Spotify Goes Public With An Estimated $30 Billion Market Value
05 April, 2018, 00:42
Spotify's opening act on Wall Street struck a chord with investors betting the unprofitable company's trend-setting music streaming service will maintain its early lead over Apple and other powerful challengers. Dropbox ended the day of trading with a market valuation of around $9 billion (£6.3 billion). In contrast to their previous high of $132.50 past year, it shows the progress the privately-held company has been making. Investors had initially pegged the company's value at $30 billion when the market opened. That was in line with informal trading on Monday, with shares changing hands at about $132, which would value the company at more than $23 billion.
The company is now valued at around $26.5bn, which is enough to put in the top 10 debuting technology companies of all-time, alongside Facebook and Alibaba.
Spotify CEO Daniel Ek who founded the company, emerged as the day's biggest victor.
This approach will save Spotify tens of millions of dollars in fees. Its biggest rivals are Apple Music - which dominates the digital downloads market - Amazon, Google, and smaller streaming services like the French company Deezer and Pandora and Jay Z's Tidal in the US.
Spotify's core business is online music streaming services that allow customers to play music through the internet.
Citing people familiar with Spotify's plans, Recode reports that the idea isn't to cut out massive labels or compete with them by handing out recording deals to musical acts.
Spotify is pursuing an unusual direct listing to reach the public markets in place of an initial public offering, and shares are expected to start trading on Tuesday.
Less certain for investors, however, is Spotify's profitability.
The firm's market debut was steered by the current financial director, Barry McCarthy, who was behind the successful listing of Netflix in 2002. After losing 1.2 billion euro, Spotify has also made it clear that it intends to remain focused on adding more subscribers instead of making money for now. However, a direct listing would be extremely hard for companies who don't have the same name recognition as Spotify. The company skipped the traditional initial public offering process in favor of a route rarely taken by large, established companies.
Spotify shares closed at $149.01 on the end of its first day of trading on the U.S. stock market yesterday (April 3), valuing the streaming service at $26.5 billion - more than Twitter and Snapchat.
Unlike other companies who handle this process with the involvement of investment bankers, Spotify is not issuing any new stock. Its closest competitor, Apple Music, is expected to overtake Spotify as the most popular music service in the United States.
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