Spotify IPO pops over 25% on trading debut

Spotify IPO pops over 25% on trading debut

Spotify IPO pops over 25% on trading debut

Spotify, the world's largest music streaming service, made its initial public offering Tuesday with a share price of $132 - or an overall valuation of $23.5 billion.

Its stock opened at $169.90, up more than 25%, before slipping back to $158.71.

The stock opened at $165.90, giving the company a market value of almost $30 billion. Spotify stock debuted on the market with a boom, opening at $165.90 in an unusual "direct listing".

However, Amazon stocks dipped after US President Donald Trump again lashed out at the tech giant, repeating his unsubstantiated claim that the online retailer is costing the country's postal service money.

The Swedish company began trading at an opening price of $165.90 per share, almost 26 per cent above the reference price, before slipping back a little.

While existing shareholders and employees can sell their shares, Spotify chose not to sell any new shares.

The company, which began in Stockholm in 2008, offers free music with commercials and, for a subscription fee, limitations or higher quality music without commercials plus downloads.

In fact, it has lost more than €2.4 billion (£2.1bn) over that period.

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Drew Pascarella, lecturer of finance at Cornell SC Johnson College of Business, says that Spotify's unorthodox listing is a one-off, unique situation as the company does not resemble classic pre-IPO firms. Taylor Swift released a new "Delicate" music video on Spotify last month.

As of January, Spotify had more subscribers than its closest competitors, with 70 million to Apple Music's 36 million paying subscribers.

Since launching its service a decade ago, Spotify has overcome resistance from big record labels and some major music artists to transform how the industry makes money.

Analysts expected the company to be valued at around $23bn but have warned that its direct listing could lead to volatile swings in its value as the market decides its future prospects.

"I have no doubt that there will be ups and downs as we continue to innovate and establish new capabilities", he wrote. Nothing ever happens in a straight line - the past ten years have certainly taught me that.

Where will the Spotify stock symbol open at?

Spotify pursued an unusual direct listing on the NYSE, bypassing the conventional offering that companies of its size normally take. "And despite the enormous respect I have for the New York Stock Exchange in this process, I also won't be on the floor doing any interviews". The opening price puts the company's value at almost $30bn, making it one of the largest USA listings for a tech company in history. "While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company", CEO Ek said.

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