Spotify Goes Public At $29.5B Valuation In Its Not-IPO

Spotify on Tuesday went public following months of preparations, having debuted on the New York Stock Exchange at $165.90 per share, with that figure amounting to a valuation of $29.5 billion, significantly above the startup’s expectations and recent estimates which stood at just north of $20 billion. Despite entering the public market, Spotify opted against holding an initial public offering and went for a direct listing, meaning its valuation could oscillate in the coming days as the company skipped the traditional process of identifying share value which involves underwriters and a wide variety of assurances. The rare move was prompted by the firm’s desire to go public but not raise any additional capital as it doesn’t have to, founder and Chief Executive Officer Daniel Ek said Monday as part of a blog post announcing the beginning of a new era for the Stockholm, Sweden-based music streaming service that will celebrate its twelveth anniversary later this year.

Spotify has never been profitable to date, with its consolidated financial report for 2017 revealing a $461 million operating loss. The firm is now betting on its premium subscriber count coming close to 100 million by the end of 2018, thus experiencing a largely unprecedented growth given how the number of its paying customers only hit 70 million this January. Mr. Ek insists Spotify’s not-IPO isn’t “the most important day” for the company, having noted how its employees were already allowed to freely trade shares for years now. Some private trading has reportedly been conducted as late as yesterday, with the firm’s decision to allow for such activity being another move uncharacteristic for major public listings, especially in the technology segment.

In the near term, Spotify is expected to continue supporting the music industry by supplanting its previously lost CD sales with royalties from music subscriptions, though it’s presently unclear whether the company will push for more exclusive deals or attempt to circumvent music labels in the long run like some industry insiders have previously been speculating. The firm’s valuation is likely to remain volatile for some time as the supply-and-demand part of its public trading equation is only now being figured out by public investors themselves. Ultimately, Mr. Ek says Spotify’s primary goal remains unchanged, with the company still aiming “to unlock the potential of human creativity — by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it.”

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