However, as The Guardian points out, it's hard to value the music streaming firm because in its 12 years of existence, it's never turned a profit, despite the fact that it now has 157 million listeners, of which 71 million are paying subscribers. 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. Spotify stock debuted on the market with a boom, opening at $165.90 in an unusual "direct listing". As of this writing, Spotify's share price is trading at $160. The company says it is present in 61 countries and its platform includes 159 million monthly active users and 71 million premium subscribers. Spotify has also made it clear that it intends to remain focused on adding more subscribers instead of making money for now.
The shares quickly wobbled in their first hour of trading, though remain well above the NYSE's reference price of $132.
RIAA reported that music revenues grew 12.6 percent to $5.9 billion in 2017, thanks in large part to paid music subscription services such as Spotify, Pandora, AppleMusic, Amazon and others. Seeking to take the company to the next level, the Swedish-based company signaled its intention to go public this past February. Spotify's decision to go public has been expected as a way to return capital to early investors, but it comes with wariness from Wall Street and from Silicon Valley. A direct listing eliminates those restrictions and allows them to potentially profit from the IPO immediately.
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That's a departure from a traditional initial public offering in which a company and a few select investors first sell a limited amount of stock at a starting price determined by investment bankers who spend weeks gauging investor demand. Instead, current shareholders were able to sell their existing shares, and were not restricted on when they could do so.
Traditionally, when a company wants to enter the stock exchange, banks are contacted to drum up investors and stabilize a price point. As much as this sounds like great news, what does this floatation really mean for the company? And it feels like the right time to pause and acknowledge the thousands of Spotify employees around the globe who helped build out the Spotify ecosystem while staying true to who we are and what we believe. Spotify wanted to democratize the process and they didn't need to raise fresh money through the offering as is often the case with an IPO.
"In normal IPOs, the underwriters stabilize the price - they put a floor under the price below which the stock price won't fall, because the underwriters will buy it at that price".