Spotify Technology SA yesterday completed the largest-ever direct listing, valuing the world’s leading streaming music service at as much as US$30 billion (RM115.8 billion), but its shares fell after an early spike.
Smooth early trading dispelled market worries that Spotify’s New York Stock Exchange debut might be marred by volatility, given the company’s choice to ditch Wall Street underwriters and other safeguards of a usual initial public offering.
Its shares opened at US$165.90, up nearly 26 per cent from a reference price of US$132 a share set by the NYSE late on Monday, but later pared gains to trade at US$149.30, as some investors expressed concerns about the company’s costs and the difficulty of going heads on against Apple.
The size of the Stockholm-founded company’s market debut puts it on a par with Snap Inc, which went public last year, and was smaller than only Facebook Inc and Alibaba Group Holding Ltd among recent tech stock listings.
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 monetises.
It now has 71 million so-called premium subscribers, including users who have given the company a credit card number for a free trial. On a comparable basis, Apple Inc has 46 million subscribers for its competing Apple Music service.
“Investors are right to have some reservations. Spotify is hemorrhaging from the costs of licensing content,” said Michael Carvin, chief executive of personal finance technology firm SmartAsset. “Even though Spotify’s scale is about twice that of Apple Music, Apple has a huge ecosystem of products to market to.”