Spotify is filing for an unconventional IPO

Spotify logo render

Music streaming service Spotify is planning to go public. The company is making a "novel" move which it acknowledges is "risky": opting for a "direct listing" rather than the more usual fundraising route.

The company will allow its investors and employees to sell shares, and there will be no need to raise more capital or hire an underwriter. It is expected that Spotify will go public in late March or early April when it will appear on the New York Stock Exchange using the symbol SPOT.

Although the lack of new shares means there is not a listing price, estimates place the value of Spotify somewhere between $19 and $23 billion. In its filing, the company notes that from January 1, 2018 to February 22, 2018, the share was between $90.00 and $132.50, but says that "our recent trading prices in private transactions may have little or no relation to the opening public price of our ordinary shares on the NYSE or the subsequent trading price of our ordinary shares on the NYSE."

The filing also says:

The listing of our ordinary shares on the NYSE without underwriters is a novel method for commencing public trading in our ordinary shares, and consequently, the trading volume and price of our ordinary shares may be more volatile than if our ordinary shares were initially listed in connection with an underwritten initial public offering.

Based on information provided by the NYSE, the opening public price of our ordinary shares on the NYSE will be determined by buy and sell orders collected by the NYSE from broker-dealers. Based on such orders, the designated market maker will determine an opening price for our ordinary shares in consultation with a financial advisor pursuant to applicable NYSE rules.

We're also given an opportunity to glimpse at Spotify's finances. The filing reveals that revenue rose 39 percent from €2.95 billion ($3.6 billion) in 2016, to €4.09 billion ($5 billion) in 2017. The company's operating losses rose from €349 million ($425 million) to €378 million ($460 million).

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