Published: Thu, April 05, 2018
Science | By Dan Gutierrez

Spotify didn't quite make sweet music with its IPO

Spotify didn't quite make sweet music with its IPO

The music streaming service, which started trading on the New York Stock Exchange on Tuesday, revolutionised the music industry with licensing agreements that make practically every popular album available to stream.

Spotify Technology shares opened at $165.90, up almost 26% from a reference price of $132 set by the NYSE late on Monday.

Spotify has taken an unusual move - most companies choose initial public offering (IPO) for their market debut.

"It's a fair market price".

Spotify's opening act on Wall Street struck a chord with investors betting the unprofitable company's trend-setting music streaming service will maintain its early lead over Apple and other powerful challengers.

For context that's around the same figures generated by Snap Inc's controversial IPO, which saw the social media company valued at $28 billion (£23 billion) at the close of its first day of trading previous year.

The direct listing by the Stockholm-founded company was the largest on record. Its shares have revalued over 80% in the previous year.

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For artists, particularly smaller, independent acts, this serves as a chance to enter into beneficial agreements with the service even if they are not associated with a major music label.

The music streamer, however, has yet to turn a profit and faces tough competition.

"Investors are right to have some reservations". But on an operating basis, excluding some financial transaction costs, Spotify lost $465 million, 8% worse than the previous year. "The chance of Spotify becoming a producer of content at all or anywhere near the scale of Netflix is like the Rolling Stones suddenly releasing a rap music album". In US, 11 per cent subscribe to a service for streamed music. Alphabet Inc's Google does not release paid subscriber numbers for Google Play Music. A year ago they posted an operating loss of $461 million, as reported by Recode.

According to Reuters, the direct listing was the largest ever.

The shares quickly wobbled in their first hour of trading, though remain well above the NYSE's reference price of $132.

UPDATE: Sony Corp predicts its total profit on its shareholding, including the stock it sold yesterday, will be 105bn Yen, or just under $1bn - that's based on yesterday's closing price.

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