Spotify debuts on the market with a boom, opening at $165.90 in an unusual "direct listing". Meanwhile, a looming trade war with China has seen shares across Wall Street plummet. Underlining the uncertainty of the company's value, estimates for expected share prices collected by IPOScoop.com ranged from $49 to $131.
One letter can make a world of difference, as the New York Stock Exchange demonstrated Tuesday morning. Direct listings are typically used for smaller launches, such as for a company emerging from bankruptcy or a public company's spinoff listing shares.
"Nothing ever happens in a straight line the past 10 years have certainly taught me that", Ek, Spotify's co-founder and chief executive, wrote in a blog post on Monday evening. Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment.
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Spotify's debut is the second recent test of investors' appetite for tech IPOs. It had 71 million paid subscribers as of December 31 and 157 million monthly active users.
PARIS, FRANCE - JANUARY 06: In this photo illustration, the logo of the Swedish music streaming service Spotify is displayed on the screen of an iPhone on January 06, 2017 in Paris, France. Apple has said 36 million people pay to use its its music streaming service, according to the Wall Street Journal. Apple Music, however, was growing at a much faster rate than its newly public rival: 5% versus 2%.
Spotify's growth has been matched by increasing losses.
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The NYSE has listed Spotify ($SPOT). Spotify has allowed its own employees and shareholders to buy and sell stock for years now. "It has never been done for a company of this size". Experts warned of some major volatility though due to Spotify's unusual 'direct listing'. It has about 71 million paying customers and hopes to increase that to 96 million. The company's management said the firm didn't actually need to raise money, like most companies that IPO do.
In February, the shares were valued at about $20 billion based on private stock transactions among existing investors.
"You don't want to underestimate how important it is to insiders to be able to sell right away", Kennedy said. The only problem was, they rose the flag of Switzerland instead.
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But a direct listing comes with risks. Almost 91 percent of Spotify's 178 million shares were tradable, a much higher percentage than typical in a traditional IPO. The stock market has also been volatile recently with the Dow Jones industrial average falling more than 450 points, or almost 2 percent, Monday. But what's even more important to me is that tomorrow does not become the most important day for Spotify. There is a possibility that Spotify stock will end up much higher today, however, as MarketWatch reports that signs point to a price closer to $155 or $160 per share. "It could be 1 million and then 100 million by Wednesday". Spotify's stock initially had a reference price of $132, which was the basis for open bidding. That basically just means that it isn't issuing new shares for the listing, and as a result, it hasn't priced its stock ahead of time.