Spotify shares surge after direct listing

Microsoft Senior VP of Entertainment Music & Gaming Jason Rutherford during a media presentation in Redmond WA. March 30th 2018

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

After a delay in early morning trading, Spotify opened on Wall Street at $165 per share - valuing the company at about $29 billion.

Even though it has been around for years, Spotify is just now becoming a publicly traded company with a multi-billion dollar IPO. Unlike other companies who handle this process with the involvement of investment bankers, Spotify is not issuing any new stock.

Tomorrow, Spotify becomes a listed public company on the New York Stock Exchange.

The opening public price was determined by buy and sell orders collected by the NYSE from broker-dealers. But until then let's step back and admire this whole thing for the zeitgeist-ian work of art that it really is; Spotify is about to unleash the first authentically Millennial IPO.

Spotify chose the direct listing method in part to ensure that employees and longtime shareholders could sell stock on day one if they choose.

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Apple said subscriptions have maintained a monthly growth rate of 5 percent and they have 36 million subscribers in the United States.

Global recorded music industry revenue in 2014 had fallen by 40 percent to $14.3 billion from $23.8 billion in 1999, when the rise of music file-sharing service Napster ravaged sales of CDs.

Bank underwriters typically play an essential role in introducing companies to large investors, Lise Buyer, an IPO consultant with Class V Group, said.

If Spotify can avoid too many wild swings in the coming days, its alternative public listing process could entice other big name companies who don't need to drum up as much investor demand as companies do in a traditional IPO. Instead, company insiders and investors will be selling their existing stock.

Spotify Technology SA also is making its Wall Street debut in an unconventional way. In addition, Spotify made a commitment to their original investors over a decade ago that they will be able to profit from their investment and this seems like the flawless opportunity. The opening price puts the company's value at almost $30bn, making it one of the largest U.S. listings for a tech company in history. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018. "While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company", CEO Ek said. It is also not known at what price the stock will start trading Tuesday.

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 U.S. yesterday.

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