Markets

Spotify Becomes Publicly Traded Company with Multi-Billion Dollar IPO

Spotify Becomes Publicly Traded Company with Multi-Billion Dollar IPO

"Spotify is floating on the stock market at a pretty inauspicious time for the tech industry, which has been rocked by the Facebook data scandal and now potentially faces greater regulation as a result", said Laith Khalaf, senior analyst, at Hargreaves Lansdown.

Typically, companies seeking a stock market listing hire investment banks to sell shares on their behalf and brokers help match buyers and sellers to make sure that the stock does not have a volatile debut.

Spotify selected market maker Citadel Securities for a role in setting an opening price based on buy and sell orders.

Spotify, which is led by CEO Daniel Ek, quietly filed for the non-traditional IPO earlier this year.

However, he did speak at length about the company's challenges from Taylor Swift, who removed her music from Spotify and other streaming services in 2014 over what she felt were unfair royalty rates - a decision she reversed past year.

Some market-watchers cautioned investors not to read too much into the first day of trading, given the mixed performance of recent tech IPOs and an increasingly competitive music streaming landscape.

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In fact, it has lost more than €2.4 billion (£2.1bn) over that period. It has about 71 million paying customers and hopes to increase that to 96 million.

In the decade since Spotify launched, it has faced a series of so-called "Spotify killers" from the likes of Apple, Google (GOOGL) and Amazon (AMZN).

Spotify chose the direct listing method in part to ensure that employees and longtime shareholders could sell stock on day one if they choose. Some 91 percent of Spotify's 178 million shares were tradable, a much higher percentage than typical in a traditional IPO. Spotify announced, via a tweet published Thursday, that it now has 70 million paid subscribers. "So I take full ownership for doing that", Ek said of the controversy. "Normally, companies don't pursue a direct listing", Ek wrote in a public post.

"Normally, companies ring bells". Most pre-IPO companies don't have shareholder bases that look like that of Spotify.

The NYSE set Spotify's reference price late on Monday to be in line with informal, private trading of Spotify shares, giving an early estimate of the level at which supply and demand could be balanced.