Spotify value exceeds $26bn after float

The Market In 5 Minutes China Tariffs Zuckerberg Spotify Model 3 Deliveries And More

The Market In 5 Minutes China Tariffs Zuckerberg Spotify Model 3 Deliveries And More

The company opened at $165.90 per share, a big jump from the reference price of $132 set by the NYSE the evening before the company's direct listing. "This is a large listing, and Spotify has the advantage of a huge consumer base which it can leverage into retail investors".

The Swedish company took an unconventional route to the market, with early investors selling their holdings and no new shares being issued. "Spotify is from the costs of licensing content", said Michael Carvin, chief executive of personal finance technology firm SmartAsset.

Crucially, these banks also "underwrite" the offer, meaning that they agree - at a price - to buy any shares that go unsold at the flotation. Sony sold about 20 percent of its shares in Spotify for a significantly higher price than it had anticipated.

For its stock debut, Spotify hired Goldman Sachs Group Inc., Morgan Stanley and Allen & Co.as advisers and paid them about $36m in total. That puts Tencent Music's overall valuation at around €10.1 billion ($12.5 billion).

Spotify shares closed 13pc on the reference price give ahead of its IPO yesterday.

Also, eMarketer analyst Paul Verna said that although it may be unfair on a company that has just entered the market, the tech sector is facing problems after Facebook's data theft scandal. Its first day of trading-with relatively few trades-continued the unusual float.

As a music-streaming service, Spotify has had to overcome plenty of obstacles and resistance from record labels, not to mention opposition from music artists. However, reports suggest that Apple Music isn't far behind Spotify in the United States and is expected to surpass 36 million paid subscribers globally by the summer.

Like many other "unicorn" companies, Spotify has never posted profits.

The success of the direct listing could pave the way for other companies looking to go public without the aid of Wall Street underwriters.

"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.

"Normally, companies don't pursue a direct listing".

Last month, Spotify announced that it is aiming for 200 million monthly users by the end of this year, with around 96 million paying subscribers.

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