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Jyrdis
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Member since Aug 2015
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Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Has anyone been paying attention to their stock offering and considered buying it?

It is going to be a direct listing instead of an IPO, and will be listed on the NYSE. I imagine with the direct listing there will be some volatility.

The Guardian

quote:

The music streaming service Spotify filed for an initial public offering on Wednesday, becoming the first company to file for a direct listing of up to $1bn with the US Securities and Exchange Commission. A direct listing is an unconventional way to pursue an IPO without raising new capital, helping the company eliminate the need for a Wall Street bank or broker to underwrite the public offer. The company would seek to list its ordinary shares on the New York stock exchange under the ticker symbol “SPOT”.


Older CNBC Artlcle (May 2017)

quote:

The streaming music service is valued at $13 billion, according to sources. The listing is expected between the fourth quarter of 2017 and first quarter of 2018. Morgan Stanley, Goldman Sachs, and Allen & Co. are advising on the listing, the sources added. The company currently has 50 million subscribers and a 43 percent growth rate in revenue. It employs over 3,000 people.


Dealbreaker

quote:

The whole thing is sensible and restrained in a way that only a bunch of Scandinavians could devise. The fact that it will frustrate the tech press – which champs at the bit for IPO-related scoops – as well as investment bankers – whose most highly remunerative services have been deemed inessential by one of the biggest startups out there – only reinforces how smart a move it is. Even if it’s an anticlimactic exit for a company that has elbowed aside behemoths like Google and Apple in its quest to reinvent how we listen to music, it’s understandable why Spotify would want to avoid the bull shite dog-and-pony of the IPO roadshow and the clusterfrick of an overhyped public offering.

All that wisdom aside, though, the Spotify public listing is still – if only by default! – a pure sell signal.


quote:

In ordinary IPOs, there’s some balance between this unspoken remunerative motivation and all the stated reasoning, whether it be raising cash to expand or reducing the cost of capital or whatever. But for Spotify, these other motivations don’t apply so much. Since they’re not raising any money, the most pertinent motivation is that insiders want to cash out.

Ordinarily, insider sales are a sell signal, if a weak one. It could be that executives are dumping stock because they’re privy to bad news or else doubt the price can rise much higher. Or they could just need to free up some cash to buy that private estancia in the Argentine pampas they’ve always wanted. Single sale offers little information; a pattern of sales becomes a signal.

Spotify’s reported direct listing will, by default, fall in the latter category. For there to be any appreciable demand, lots of insiders will have to offer up lots of stock. Clearly Spotify expects lots of stock to be forthcoming, or at least enough to get the thing trading. Perhaps trading volume will remain low and Spotify stock will begin its public life in a whirlwind of volatility, as Matt Levine predicts. But whatever happens, a public Spotify will be borne upon a wave of insider sales.


Marketwatch

quote:

Spotify Technology SA has chosen electronic-trading firm Citadel Securities LLC to oversee its unusual debut at the New York Stock Exchange, people familiar with the situation said.


quote:

Spotify declined to comment. The Stockholm-based company could go public as soon as the week of March 26 through a process called a direct listing.


CNBC

quote:

The Swedish company said it expected 2018 revenue of 4.9 billion to 5.3 billion euros ($6.1 billion to $6.8 billion), which would mark a slowdown from the 39 percent growth recorded in 2017.


quote:

Shares of Spotify Technology are set to begin trading on the New York Stock Exchange on April 3 in an unusual direct listing without traditional underwriters. The company was valued around $20 billion based on private stock transactions among existing investors and employees in February, according to its filing. Loss-making Spotify, which is prioritizing rapid growth over profits, said it expected to have signed up between 73 and 76 million paying subscribers this month, roughly twice as many as closest rival Apple has disclosed. For the full year, it is aiming for 92-96 million premium users, it said.
This post was edited on 4/3 at 10:47 am


castorinho
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Member since Nov 2010
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
I don't know about long term, but this could be a great opportunity for a quick profit.


Jyrdis
Auburn Fan
Member since Aug 2015
4882 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

I don't know about long term, but this could be a great opportunity for a quick profit.


This was my initial take as well. To my understanding, institutional buyers will be in the same pool as retail investors when this stock is officially offered. What I wonder is if we something like what happened to SNAP.


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cuyahoga tiger
LSU Fan
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Member since Nov 2011
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
I'm going to buy when its available.


leoj
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Member since Nov 2010
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Why are they not doing an ipo to raise money? What is their market share of the streaming music business?


Jyrdis
Auburn Fan
Member since Aug 2015
4882 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

Why are they not doing an ipo to raise money?


Good question, and one I don't have an answer for right now. When I first heard of their intention to direct list, the interview had some finance or law professor mention that he barely teaches that method due to it being rare for small to large companies to pursue it. I'll research it some more and see if I can give a better answer. Though, article 3 listed above, may have some insight.

quote:

What is their market share of the streaming music business?


They have the largest paid subscriber base at 60 million. I think I've seen total subscribers at 100 million. Market share in the US is around 51%. See the article below for competitors and other numbers. Apple play appears to be its biggest competitor at 22% followed by Pandora at 7%.

Digital Music News


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Skeezer
Member since Apr 2017
447 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
I’m not optimistic long term at all. In fact I can see a snap type situation


lynxcat
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Why? Spotify provides a service that is far from a fad and has barriers to entry.


GenesChin
Army Fan
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Member since Feb 2012
32898 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

Why? Spotify provides a service that is far from a fad and has barriers to entry


They already are reporting a 1.5bil loss on only some 4bil revenues without a clear way to remedy that

Apple is expected to make a huge push into this market this year while there is always Google/Amazon who both already have the infrastructure in place just haven't prioritized



This post was edited on 3/1 at 7:53 am


SurfOrYak
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Spotify may have market share, but has operated with huge net losses...


lynxcat
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Interesting. I haven't looked at the company financials but I've been a loyal user for years now. What you describe sounds like a cash flow nightmare....


LSU1018
LSU Fan
Baton Rouge
Member since Feb 2007
6583 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
I definitely believe in their product by being a user but I also think Amazon, Apple, and Google could easily put a dent in their market share if they really want to.


Lsupimp
Colorado Fan
Acceptance.
Member since Nov 2003
51729 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Customer acquisition is their challenge. I am more optimistic than many that they will get there subscriber-wise. Partially because it is in the best interest of their revenue partners to have one dominant subscription service that the music industry and artists can count on. They obviously aren't there yet. And people that use Spotify are very loyal to it. Being able to share music with my musician children on a daily basis gives it the kind of habit-forming immediacy that is required for brand dominance and loyalty.


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FredsGotSlacks
LSU Fan
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Member since Mar 2008
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

They already are reporting a 1.5bil loss on only some 4bil revenues without a clear way to remedy that Apple is expected to make a huge push into this market this year while there is always Google/Amazon who both already have the infrastructure in place just haven't prioritized


Apple has had a similar service for a while and it hasn’t really taken off. Also they’ve only got about 30-40% of handhelds in the world so even if they somehow managed to get every iPhone to use their streaming app Spotify is still the best option for everyone else. Amazon and pandora are their competition but pandora premium sucks and Amazon was trying to push their prime audio for a while but seems to have given up on it.

I wouldn’t be surprised to see Spotify try to start offering more partnerships with phone carriers similar to what Netflix has done and possibly delve into audio products.


Zoltan
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
This is a situation where I envision myself pulling the trigger for a decent amount the second it’s available, only to sell half of my initial investment end of day 1 win or lose. The rest I’ll ride out for a while and see what happens. If it goes the SNAP route, I’ll find myself sitting on basically a heavily discounted ride from the onset with the profits from the day 1 sell off . If not, oh well.

There’s so much volatility with this stuff, I would rather be content with having gambled a loss and ride it out long term vs. being on the sidelines for what could have been. (That thought is based purely on the brand recognition of this one)


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Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
9035 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

Apple has had a similar service for a while and it hasn’t really taken off.


I love my Spotify as a user, but NY Times says Apple’s service is on the grow faster than Spotify.

I always worry with these that, just like Blockbuster (a huge stock at one time), a better product can show up and wipe them out overnight.


Powerman
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re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

I always worry with these that, just like Blockbuster (a huge stock at one time), a better product can show up and wipe them out overnight.



I'd argue google play music is already better


sandraccoon
LSU Fan
In the middle of nowhere
Member since Apr 2013
1301 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
quote:

I'd argue google play music is already better



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Jyrdis
Auburn Fan
Member since Aug 2015
4882 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
Updated OP for any interested parties.

Marketwatch

quote:

Spotify Technology SA has chosen electronic-trading firm Citadel Securities LLC to oversee its unusual debut at the New York Stock Exchange, people familiar with the situation said.

Spotify declined to comment. The Stockholm-based company could go public as soon as the week of March 26 through a process called a direct listing.


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Jyrdis
Auburn Fan
Member since Aug 2015
4882 posts

re: Spotify (SPOT) (April 3rd Direct Listing) $160-165 est. opening price
OP updated for any interested parties.


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