Spotify soars in nearly $30 billion stock debut

Unorthodox step of listing shares directly allows founders and investors to maintain control

NEW YORK, April 3, (AFP): Spotify soared Tuesday on its longawaited public listing to a value of nearly $30 billion, in a ringing early endorsement for the future path for the trailblazing music streaming platform.

Spotify opened on the New York Stock Exchange at $165.90 a share, giving the Swedish company a value of $29.5 billion. The share price was about a quarter higher than the initial reference point set on the bourse, with the value largely holding firm in initial trade.

On its debut, Spotify already tops the market capitalization of other high-profile tech firms that have listed in recent years including Twitter, Snapchat parent Snap and Dropbox.

Trading as SPOT, Spotify took the unorthodox step of listing shares directly on the bourse rather than issuing new stock, allowing its founders and investors to maintain control and avoiding the cost of hiring Wall Street underwriters.

The unusual listing had added to the suspense over how Spotify would fare on the market as the company, while big on its cool factor, has yet to turn a profit.

Spotify has helped change the way much of the world listens to music by popularizing streaming — unlimited, on-demand songs online.

In the United States, the largest music market, revenue from recorded music grew a robust 16.5 percent in 2017, marking the first time since 1999 at the dawn of online music that the business has expanded for two years in a row.

The growth — in line with global trends — was almost entirely attributable to the rise in streaming subscriptions, according to the Recording Industry Association of America.

Thanks to the massive inroads of streaming, Spotify has managed to mollify critics, at least for now.

Pop superstar Taylor Swift, who once railed that Spotify was shortchanging artists and boycotted the service, recently debuted a video as an exclusive to the platform.

Few prominent Western

artists still refuse to stream on Spotify other than rap mogul Jay-Z, who runs his own fledging rival Tidal, and his wife Beyonce. But Spotify faces rising competition, most notably from Apple which launched its own service in 2015 to seize a slice of the booming streaming market.

Retail behemoth Amazon has boasted of quick growth for its own new service, while tech titans Google and Facebook are both working hard to build up their music offerings.

Before the start of trade, John Tinker, analyst at Gabelli and Co, gave Spotify a hold rating — advice neither to buy nor sell.

While anticipating that Spotify share prices could start off strong, he saw risks for the company — which has yet to extract itself from the red.

“Apple is growing faster than Spotify and has a different business model whereby music does not have to be profitable on a standalone basis,” he said.

Spotify said in a regulatory filing that it had 159 million monthly users including 71 million paying subscribers — twice that of closest rival Apple Music.

Spotify warned last week that its sales growth was likely to slow this

In this file photo taken on May 20, 2015 Daniel Ek, CEO of Spotify, speaks to reporters at a news conference in New York. Spotify will go public on April 3, as the world’s largest streaming company lists on the New York Stock Exchange.

(AFP)