The world’s biggest music streaming service Spotify has filed documents so its shares can be traded on the New York Stock Exchange. The company has placed a value of up to $23 billion (£16.7 billion) on its business and priced shares accordingly.
The company has disclosed that private share deals in the past year were placed at values between $37.50 and $125, while shares this year are being sold at over $132. Analysts suggest these figures will place the company between $6.3 billion and $23 billion when it comes to market, possibly making it one of the largest public tech company launches since 2012. Spotify plan a direct listing of their shares on the NYSE and will not participate in the traditional stock offering procedure.
Spotify launched its music streaming service in 2008 and was a previously unknown Swedish company. The business persuaded some of the major record labels to upload many millions of song titles, for users to stream. Although the record labels benefit from royalties, they only obtain a fraction of the sums they would receive from online music sales.
Spotify has deals in place with the three major music labels, Warner, Sony and Universal, however, there are no guarantees these deals will continue. What’s more, Apple, Google and Amazon all provide music streaming services from a base which includes direct hardware, unlike Spotify.
The business is now active in 61 countries around the globe and has 71 million paid subscribers, with 159 million users active on a monthly basis.
The direct listing of Spotify shares makes it easy for current shareholders to take their shares direct to market. It’s suggested that the share launch has been planned in order for Spotify’s early investors to realise the value of their shares. The company does not plan sales of shares to raise significant sums of money for the business.
Investors looking to buy Spotify shares should take notice of the Snapchat market launch, which had market capitalisation of around $30 billion following first day trading in 2017, but has failed to sustain this valuation.