Spotify finally goes public with a valuation of almost $24 billion

04 April, 2018, 01:07 | Author: Cecelia Webb
  • Tyler Roi Conde
Pelle

The industry has returned to growth since 2015 driven by streaming service revenue, which now accounts for 60 per cent of recorded music sales, according to market estimates.

Swedish telecommunications giant Telia has sold its minority stake in Spotify for a total consideration of $272m in private trades. However, Spotiy, who have been around for 12 years, are yet to make an annual profit.

The European stock markets were dumped during the course of trading today as a follow up of the dump in the stock indices in the USA yesterday. By comparison, internet radio station Pandora Media's market value stands at $1.2 billion almost seven years after that company went public.

But Spotify is based in Stockholm, Sweden, not Switzerland. "Apple's original model, curated streaming, the Pandora model, and even streaming of live radio stations (the iHeart Music model)".

"Spotify has been a fantastic investment for Telia Company, both from a direct return and a partnership perspective", said CEO Johan Dennelind. In its regulatory filing, it revealed it has 159 million active users, with 71 million of them paying for the service, more than double Apple Music's subscriber base.




"The similarities here, we believe, are much greater than the differences", RBC Capital Markets analyst Mark Mahaney wrote in a recent research note assessing the parallels between Spotify and Netflix. By 1:30pm EDT, the Wall Street Journal was reporting that Spotify was now valued at $30 billion, meaning that this could prove to be the third-largest IPO ever after Alibaba and Facebook.

But analysts point out that Netflix has been most successful in producing its own original content, something which Spotify has not indicated it will pursue. Now the streaming music service is worth almost $30 billion. Analysts are anxious that will be more hard for Spotify to do because it is primarily negotiating for the same music streaming rights as Apple, Google and Amazon - companies that can afford to pay even more, if they want.

Spotify Technology SA is an innovative digital music service offering music fans instant access to a world of music. The company opted to forego the traditional IPO and instead list and trade its shares without the help of an investment bank. That number will come down if Ek and Lorentzon sell a big chunk of their Spotify shares through Tuesday's direct listing.

In another unusual twist, the company's founders declined to ring the traditional opening bell on the trading floor on Wall Street.

"While this is obviously a big day and I'm really proud of my employees, I really just feel like we're in the early days, not celebrating the end days like so many other companies are doing", Ek said about the company's upcoming NYSE listing.

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