Spotify Files for IPO

On Wednesday, music streaming services Spotify said it would be going public. The company will start trading under the ticker symbol SPOT on the New York Stock Exchange and according to a spokesperson shares have traded for up to $132.50 across private markets, which give the company a $23 billion valuation based upon ordinary shares that were outstanding as of Feb. 22.

Spotify is the global leader for music streaming services. It reported 71 million paid subscribers and over 159 million active monthly listeners as of December of 2017. It can be accessed in 61 countries and its closest competitor is Apple Music, which is well behind with only 36 million paid subscribers.

In 2015, Spotify reported $2.37 billion in revenue, followed by $3.6 billion during 2016, and just over $4.99 billion for 2017. It said that paid subscribers were growing by 46% year over year, while monthly active users were growing by 29% year over year.

The company posted a $1.5 billion loss during 2017, of which $1 billion was due to a one-off expense for convertible notes that came from a transaction in December of 2017 with Tencent. Its operating loss in 2017 was $461.2 million.

The company is facing tough challenges ahead to its current business model, including a big risk from the unpredictable and fluctuating royalty rates paid to publishers, music labels and songwriters.

The initial public offering of Spotify will not have an underwriter, meaning there will not be any set price that underwriters make.

The company released a statement saying that the listing was using a non-underwritten initial public offering so no book building process would be used and no price where the underwriter first sold shares to public investors.

Following the rules established by the NYSE, Spotify said it has hired Morgan Stanley as its financial advisor to be consulted with in setting the opening price for the public for Spotify ordinary shares to be sold on NYSE.

The company continued by saying based upon information that the NYSE provided, the opening price of ordinary Spotify shares would be determined through buy and sell orders.

Spotify said it would be listing its stock as soon as is practicable following this current registration statement being declared to be effective.