Shares of music streaming service Spotify Technology SA are set to begin trading on Tuesday.
Spotify will make its highly anticipated Wall Street debut on Tuesday, potentially raising billions for company employees and existing investors, and luring some Silicon Valley heavy weights to follow them onto the public markets.
If successful, Spotify could become a roadmap for the array of multi-billion dollar tech companies, investors are now hoping will go public soon, including Airbnb, Lyft and Uber.
Spotify went public on Tuesday through a so-called direct listing.
While pressure is on to pay higher royalties to music creators, Spotify has made inroads with artists.
Spotify declined to comment for this story citing the SEC mandated "quiet period", which restricts companies from making certain public statements during the going public process. 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.
While Spotify has some bank advisors, a direct listing allows it to trade on an exchange without all the regulatory hassles and expensive bankers that are the hallmarks of the traditional IPO.
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The Associated Press reports that Spotify competitor Pandora is valued at $1.2 billion, and that the streaming service has been compared to having the growth potential of Netflix which is worth about $122 billion.
PARIS, FRANCE - JANUARY 06: In this photo illustration, the logo of the Swedish music streaming service Spotify is displayed on the screen of an iPhone on January 06, 2017 in Paris, France. The company is using an unusual direct listing process rather than the standard process used for nearly all IPOs.
Spotify has helped change the way much of the world listens to music by popularizing streaming - unlimited, on-demand songs online. Almost 91 percent of Spotify's 178 million shares were tradable, a much higher percentage than typical in a traditional IPO.
The stock began trading at $US165.90 a share shortly after noon, resulting in a valuation of roughly $US30 billion. And for its IPO, it opted for an unconventional "direct listing", bypassing Wall Street firms. This is because in its 12 years of existence, the company costs are far greater than its revenues and as much as that gap is narrowing, there is no assurance that Spotify can become truly profitable. Spotify subscriptions, meanwhile, are growing by an average of 2 percent per month.
The NYSE had set a reference price of $132 for the stock, though the actual price will be determined by shareholders.
"In normal IPOs, the underwriters stabilize the price - they put a floor under the price below which the stock price won't fall, because the underwriters will buy it at that price".