Streaming music leader Spotify Technology SA was facing a possible rough ride in its trading debut yesterday, with the company’s unusual direct listing coming the day after a steep technology sell-off on Wall Street.
In a public letter published ahead of its unorthodox listing in New York, chief executive Daniel Ek cautioned employees and fans that “sometimes we succeed, sometimes we stumble” and “I have no doubt that there will be ups and downs”.
Nonetheless, in informal trading on Monday, pricing for Spotify appeared to be holding up, changing hands at about $132 (R1 560) a share, which would value the company at more than $23-billion (R272-billion).
Spotify Technology SA’s unusual route to becoming a public company is a test case for other multibillion-dollar tech companies looking to sell their shares but that are not in need of cash.
The New York Stock Exchange set Spotify’s reference price at $132 a share late on Monday, giving an early estimate of the level at which supply and demand could be balanced.
Since launching its streaming music service a decade ago, the Stockholm-founded company has overcome heavy resistance from big record labels and some major music artists to transform how the industry makes money.
It offers access to vast music libraries rather than making users pay for CDs or downloads.
The company has structured the stock market listing to allow existing investors to sell directly to the public while offering no new shares of its own, in a test case being watched by other well-funded multibillion-dollar tech firms.
Forgoing hiring investment banks as underwriters or holding traditional promotional events with institutional investors could lead to extreme volatility when formal trading began, analysts said.
Still, the market steadied in early trading after Monday’s sell-off.
