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Spotify, the world’s largest music-streaming service has filed to go public. In a rather unorthodox move, the Swedish-based company stated its intention to list shares directly on the NYSE (under the stock ticker symbol, ‘SPOT’), thus bypassing the traditional process.
A Different Kind of Filing
According to the company’s SEC filing, Spotify justified the decision for the unusual offering as follows:
“As this listing is taking place via a novel process that is not an underwritten initial public offering, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on the NYSE. Pursuant to NYSE Rules, we have engaged Morgan Stanley & Co. LLC (“Morgan Stanley”) as a financial advisor to be available to consult with the designated market maker (the “DMM”) in setting the opening public price of our ordinary shares on the NYSE. Based on information provided by the NYSE, the opening public price of our ordinary shares on the NYSE will be determined by buy and sell orders collected by the NYSE from broker-dealers and the NYSE is where buy orders can be matched with sell orders at a single price.”
Spotify’s Facts and Figures
According to the filing, as of December 2017 Spotify boasted more than 159 million monthly users, 71 million of which were paying subscribers. The number of paying subscribers Spotify claims is nearly double that of the company’s nearest competitor, Apple Music, and their reported 36 million paying subscribers.
According to the filing, the company posted robust revenues of $4.99 billion in 2017, $3.6 billion in 2016, and $2.37 billion in 2015 (based on current Euro conversion rates). Even so, the company also reportedly posted losses of $1.5 billion in 2017, which lead some to speculate that the music streaming service may simply be a bad business to be in, even if you do happen to be leading it. However, with the wild popularity of the service, others estimate the IPO could see the company valued as high as $20 billion.
Spotify was founded in 2006 in Stockholm, Sweden by Daniel Ek and Martin Lorentzon. Long the preferred platform for both music fans and artists, Spotify offers both monetization for artists, and freemium services for more frugal fans, as well as an ad-free subscription service. With the anticipated influx of funding from the IPO, Spotify looks to be solidifying its position in the competitive music streaming space. To date, the company has reportedly raised $2.7 billion from 20 rounds of funding, including several rounds of convertible notes, debt financing, and a $526 million Series G.