Analysts had anxious ahead of Spotify's direct listing that forgoing underwriters and traditional promotional events created to stimulate interest from institutional investors could mean volatility once formal trading kicked off. Spotify kicked off trade at $165.90 and was down 3% at $160.50 in recent trade, after hanging around a range between $167 to $170, as holders of the stock tried to arrive at a price to kick of trade and market makers gauged overall demand.
Spotify has began trading on the New York Stock Exchange just moments ago. On Monday, the New York Stock Exchange set the company's stock reference price at $132.
After initially spiking as high as $US169, shares eventually slid to close at $US149.60, according to Markets Insider data. Rather than taking the traditional IPO route, Spotify instead filed what is known as a direct listing, which allows existing shareholders to list their shares directly without going through an underwriter.
"Normally, companies don't pursue a direct listing".
As of January, Spotify had 70 million subscribers, compared with Apple Music's 36 million. "Even though Spotify's scale is about twice that of Apple Music, Apple has a huge ecosystem of products to market to". A huge number of shares hitting the market all at once could sink the stock price.
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"Normally, companies ring bells".
"Spotify is not raising capital, and our shareholders and employees have been free to buy and sell our stock for years", 35-year-old chief executive and co-founder Daniel Ek said in a blog post Monday ahead of the listing of "SPOT" shares.
Stay up to date with all of the artists featured in the CMU Approved column by subscribing to our Spotify playlist. Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment. The company says the goal is to make investment in the business more transparent.
In informal trading, pricing for the music streaming leader appeared to be holding up, changing hands at about that level, which would value the company at more than $23 billion.
The Guggenheim analyst summarized the likely investor debates about the stock this way: "It remains unclear if competitors can replicate the experience or leverage engineering and technology resources to develop a similar or superior offering".