Spotify valued at almost $30 billion in unusual Wall Street debut

Spotify valued at almost $30 billion in unusual Wall Street debut

Spotify valued at almost $30 billion in unusual Wall Street debut

Spotify appeared to be bracing for a potentially rough ride on its first day of trading on Tuesday, following Monday's steep sell-off of technology stocks on Wall Street.

Spotify (SPOT) shares surged after the music-streaming company made its debut Tuesday as a public company.

Spotify disclosed in a securities filing for the offering, "There could be greater volatility in the public price of our ordinary shares during the period immediately following the listing".

A Swedish-founded company, Spotify is taking a very unique approach to trading on the Stock Exchange, by trading shares for whatever investors feel they are worth, rather than selling them for fixed price in order to instigate a financial windfall.

Case in point: Dropbox, another mature but unprofitable billion-dollar tech company facing a similarly daunting list of rivals, is up more than 40% from its IPO last month. It surpass Apple Music, Pandora, Google Play Music, Amazon Music Unlimited, Tidal and iHeart Radio, among others. Here's a piece outlining all you need to know about Spotify's public debut.

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Where will the Spotify stock symbol open at? Apple Music, however, was growing at a much faster rate than Spotify: 5% versus 2%. Spotify lost about $1.5 billion in 2017, more than double its loss from the prior year. By going public through a direct listing, Spotify will avoid the hefty fees that are typically earmarked for banks.

Such listings, sometimes called a "direct public offering", cut out traditional underwriters that would line up investors, drum up interest for the stock and help support the initial stock price. But what's even more important to me is that tomorrow does not become the most important day for Spotify. In addition, Spotify made a commitment to their original investors over a decade ago that they will be able to profit from their investment and this seems like the ideal opportunity. Instead, it's completing a direct listing.

The direct listing could result in wild swings in Spotify's stock pricing during the first few days of trading, especially since Spotify's shares have sold in a range of $48.93 to $132.50 in privately negotiated transactions during the first 11 weeks of this year. The stock market has also been volatile recently with the Dow Jones industrial average falling more than 450 points, or almost 2 percent, Monday.

The NYSE had set a reference price of $132 for the stock, though the actual price will be determined by shareholders.

"If the stock is choppy when it takes off the stabilization agent attempts to create a floor of where the stock price could go", said Lise Buyer, an IPO consultant with Class V Group in Silicon Valley.

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