Mormon Dancer/PhotoPin (CC-BY)
The public debut won’t happen until late March or early April, but Spotify released its filing and said the company is targeting a $1 billion initial public offering (IPO), or the very first sale of stock issued by a company to the public. It is unclear how much the shares will cost on the New York Stock Exchange, according to TechCrunch.
The music streaming app isn’t selling its shares to the public, though. Instead, it’s opting for “direct listing,” which means Spotify won’t be issuing new shares. Rather, employees and previous investors will be selling existing shares to stock market investors.
No IPO means there are no investment banks to price the initial offering, meaning the public markets will be the only thing balancing out the worth of shares when Spotify starts trading, according to TechCrunch.
According to a CNBC report on the filing, “shares have traded as high as $132.50 on private markets, which would give the company a valuation over $23 billion.” The filing also revealed the company lost $1.5 billion in 2017.
As of December 2017, Spotify reported 71 million paying subscribers and more than 159 million monthly active listeners, making the app a global leader in streaming services.
“We set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry,” the company said in its filing, according to CNBC. “Spotify was founded on the belief that music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans.”
Some are hyped about Spotify’s move.
Others think the IPO filing is a mistake because other tech offerings raise money by offering new shares. Also, Spotify’s filing calculations seem unclear when pinning down how much a share is actually worth.
I’ve seen Spotify’s IPO filing. Here are the key facts: The company is losing money at the rate of $30 million per month. Growth is slowing & the company is sitting on almost $2 billion in liabilities. Trust me, this company’s business model is broken. https://t.co/8EDmy6Wbs7
— Ted Gioia (@tedgioia) February 28, 2018
It's interesting Spotify is stressing its non-subscription, ad-supported business is strong enough to stand on its own. Have they not seen Pandora's stock price? pic.twitter.com/XWGh6Ty8d6
— Shira Ovide (@ShiraOvide) February 28, 2018
Goldman Sachs, Morgan Stanley, and Allen & Company are advising Spotify on the offering. It’s unclear whether the streaming service will thrive under the new trading system or crash and burn. Either way, we still want dope playlists, so we’re pulling for the streaming service.