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

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”.

---

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.

---

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 bullshite 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.

---

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.

---

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.

---