NEW YORK – Spotify Technology SA (SPOT.N), an unusual way to become a public company, is a test case for more billions of billions of dollars who want to sell their shares but do not need money.
On Tuesday, investors will be able to buy and sell shares in the Swedish music streaming service on the New York stock exchange’s “first stock exchange”.
This means that Spotify will not find investment banks as insurers and will not provide an investor exhibition as is usual with the traditional IPO.
If it works well, other highly valued tech companies expect to continue trading in the future, like the American companies Uber Technologies Inc. [UBER.UL] and Lyft Inc.
Wall Street banks will also seek feedback from investors this day and are looking for ways to generate at least a few million dollars of potential losses from subscription fees.
“Everyone will look at what happens to Spotify,” said Professor John Coffee, a professor at Columbia Law School, which focuses on securities regulation.
Due to the top-notch nature of the record, observers will watch to make sure that Spotify’s public market awards do not fall under the private prize and trading is relatively stable.
Spotify can avoid traditional IPOs because it does not require new capital and is a popular consumer brand that investors do not need to educate through a roadshow.
This is a great moment for the venture capital industry, “said Felix Capital managing partner Frederic Court, a European venture capitalist.” It will allow the return of billions back to investors who will release more capital to Europe. ”
Spotify’s direct listing also tracks several mixed bags of recent IPOs of some so-called technical unicorns that were worth at least $ 1 billion.
Snapchat owner Snap Inc. (SNAP.N) and Blue Apron Holdings Inc (APRN.N) buyer failed to meet their IPO award once they started trading in public markets.
In the case of Blue Apron, its market capitalization dropped from more than $ 2.5 billion to less than $ 400 million.
Today’s IPO of Dropbox Inc. (DBX.O) reported in March that Cloud Repository shares are accounting for more than 35 percent on the first trading day, indicating that the traditional IPO route may be a success for startups.
“Dropbox and Spotify are very important unicorns, two ways,” said Coffee
Lyft said in December that the last round of funding has earned him $ 11.5 billion. Uber’s latest award was set at more than $ 70 billion.
Uber and Lyft did not respond to Spotify’s comment requests.
Rapid growth over profits
The loss of Spotify, which favored rapid growth over profits, and whose closest rival is Apple Music (AAPL.O) Apple Music, which was launched in 2008 and at the end of 2017 had 71 million subscribers.
Together with co-founder Daniel Eko, Spotify reportedly estimated $ 20 billion in private equity transactions in February.
Citadel Securities will act as the designated market maker for Spotify’s stock, a source familiar with the listed listing, and set the initial price on Tuesday.
Spotify hired Goldman Sachs Group Inc. (GS.N), Morgan Stanley (MS.N), and Allen & Company LLC as financial advisors, but will not have a subscription role
This approach saves the company’s money but will likely lead to volatility when equity assets start trading as the market tries to find a price that is comfortable, “said Laith Khalaf, senior analyst at Hargreaves Lansdown.
One banker with a capital market in a large non-direct listing company said their syndicated table was asked to ask investors for feedback after Spotify’s listing.
Syndicate desks market, pricing, and distribute stock offers.
The purpose is to give the bank the color to participate in meetings with prospective clients if the direct listing is considered a successful