×
You will be redirected back to your article in seconds

Spotify Stock Pops in IPO Debut, Before Cooling Down to $26 Billion Market Cap

UPDATED, 4:02 p.m. ET: After Spotify opened with a bang in its stock-market debut Tuesday, the stock drifted down 10% — but still gave the music streamer a higher-than-expected valuation.

Spotify opened at $165.90 per share, 25% higher than the top end of private stock sales disclosed by the company, giving the company a market valuation of $29.5 billion. Shares began trading on the New York Stock Exchange on Tuesday at about 12:43 p.m. ET under the ticker symbol “SPOT.”

The stock closed at $149.01 per share. That’s still well above what Spotify has disclosed for private stock sales from Jan. 1-March 14, 2018, which had varied widely — ranging between $48.93 and $132.50 per share.

Spotify’s current market cap of $26.4 billion makes it more valuable than CBS, Twitter, Snap, Sprint, Dish Network and Viacom.

The music streamer’s unconventional direct-listing IPO — which bypassed Wall Street banking firms as underwriters — is expected to be one of the biggest tech offerings of the year. Spotify isn’t raising any capital with the IPO. Rather, it’s designed to let existing investors cash out their holdings; those include Sony Music Entertainment, which owns 5.7% of outstanding shares, and Universal Music Group and Warner Music Group, which each hold around 4%. With the IPO, Spotify shareholders are eligible to sell up to 55.7 million regular shares, representing 31% of outstanding shares.

In less than 15 minutes, more than 10 million Spotify shares had been traded. About 29.8 million shares total were traded in just over three hours on Tuesday. The NYSE had set a “reference price” Monday of $132 per share as a placeholder prior to the initial public offering.

Founded in 2006, Spotify has never been profitable and its rivals include Silicon Valley heavyweights Apple, Amazon and Google. But at least out of the gate, investors displayed enthusiasm to own a piece of the Sweden-based firm. Spotify is the No. 1 global music-streaming provider with an estimated 42% worldwide market share in 2016.

Spotify CEO Daniel Ek, in a blog post Monday, said he expects the company to experience “ups and downs as we continue to innovate and establish new capabilities.” He tried to convey a business-as-usual air, saying about the IPO that “our focus isn’t on the initial splash” and that he hoped Spotify’s public-market debut does not become the most important day in its history.

“Spotify is not raising capital, and our shareholders and employees have been free to buy and sell our stock for years,” Ek wrote. “So while tomorrow puts us on a bigger stage, it doesn’t change who we are, what we are about, or how we operate.”

For 2017, the company generated around $5 billion in revenue in 2017 (4.1 billion euros), versus $3.6 billion in 2016. Its net loss for 2017 more than doubled, to $1.5 billion (1.2 billion euros).

Spotify has fans on Wall Street based on its potential growth. “Spotify is the global leader and has sustainable advantages,” RBC Capital Markets’ Mark Mahaney wrote in a March 29 note, initiating coverage with an “outperform” rating and a $220-per-share price target. A valuation of nearly $40 billion for Spotify is “highly reasonable,” he added.

Even after the IPO, Ek and co-founder Martin Lorentzon will very likely maintain majority control of Spotify even if they sell a portion of their holdings. As of March 21, Ek controlled 37.0% of the Spotify’s total voting power and Lorentzon controlled 43.5%. Ek directly owned 15.6 million shares (8.8% of outstanding shares) and Lorentzon held 21.7 million (12.2%).

Spotify operates in 65 countries and territories. As of the end of 2017, it tallied 157 million monthly active users and 71 million premium subscribers. It restated user metrics two weeks ago, eliminating 2 million users from its MAU total to account for fraudulent streams from freeloaders using hacked apps.

Chinese internet giant Tencent owns 9.1% of Spotify’s outstanding shares, while Spotify holds 9% equity in Tencent Music Entertainment. The parties have agreed to retain their ownership in the shares until at least December 2020.

More Digital

  • THE UMBRELLA ACADEMY

    'The Umbrella Academy' Superheroes Series Premiere Date Set on Netflix

    The dysfunctional-family superheroes of “The Umbrella Academy” are landing on Netflix worldwide on Feb. 15, 2019. The live-action series is based on the “Umbrella Academy” comic books created and written by Gerard Way and illustrated by Gabriel Bá, published by Dark Horse Comics. The Netflix original series comprises 10 one-hour episodes. “The Umbrella Academy” stars [...]

  • ATF: Hooq Adds Trio of Original

    ATF: Hooq Adds Trio of Original Series, Partnership With Vice Media

    Asian video-on-demand service, Hooq has unveiled three Indonesian-made original series, and a partnership with online content group Vice. The new shows range from a talk show “TL;DR” that will be co-produced with Vice, to a full-length series, “Check Out The Store Next Door” (“Cek Toko Sebelah the Series”) and a short form series. The partnership [...]

  • ATF: Indian Streamer Eros Now Launches

    ATF: Indian Streamer Eros Now Launches 'Flesh' as Original Series

    Eros Now, the video streaming arm of Indian film production and distribution giant Eros International, has begun production of an original web TV series. Its human trafficking drama “Flesh” will air in early 2019. “Flesh” stars Swara Bhaskar (“Raanjhanaa,” “Veera Di Wedding”) as a belligerent female cop who takes matters into her own hands in [...]

  • Avengers End Game Trailer

    'Avengers: Endgame' Trailer Smashes 24-Hour Video Views Record

    With the Marvel fandom’s anticipation leading up to “Avengers: Endgame,” it’s no surprise that the trailer drop set a new record for most views in its first 24 hours. The “Avengers: Endgame” trailer was viewed 289 million times in its first 24 hours, after it was released around 5 a.m. PT Friday, according to Marvel [...]

  • Fandor Logo

    Fandor Lays Off Staff, Sells Assets of Indie-Film Streaming Service (EXCLUSIVE)

    Fandor, the independent-film streaming service, has laid off nearly all of its employees and has sold its assets, Variety has learned. Reached for comment, Fandor CEO/chairman Chris Kelly sent a statement in which he said Fandor has a deal in place that will let a “new entity” continue to operate the service. He declined to [...]

  • ESL And Oculus Partner For VR

    ESL And Oculus Partner For VR Charity Challenge Game Show

    Esports company ESL is teaming up with Oculus for the Change the Game VR Charity Challenge (VRCC), it announced on Friday. Two teams of influencers will compete for a $100,000 prize during the event. Each will represent one of two gaming charities — Stack Up or Take This. Stack Up is a nonprofit that works [...]

More From Our Brands

Access exclusive content