Spotify opens at $165.90, valuing company at nearly $30 billion

Microsoft Senior VP of Entertainment Music & Gaming Jason Rutherford during a media presentation in Redmond WA. March 30th 2018

Will Spotify change its tune after stock market listing?

Interestingly enough, the NYSE set Spotify's reference price at $132, a figure which has the potential to fluctuate quite a bit once shares finally begin trading and buy and sell orders are aligned.

Despite the company's impressive growth, not to mention its focus on diversifying its revenue streams, the company faces a serious challenge from Apple Music, Apple's own streaming service.

Spotify shares closed about 10 percent below the opening price, at $149.01 each, valuing the startup at nearly $27 billion and Tiger Global's holding at $1.91 billion. Competitors such as Apple Music and Tidal are much smaller by comparison. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018. Instead, the event known as a "direct listing", is a collection of transactions from existing shareholders (like employees and investors) selling shares directly to stock market investors.

"Nothing ever happens in a straight line the past 10 years have certainly taught me that", Ek, Spotify's co-founder and chief executive, wrote in a blog post on Monday evening.

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Some were hesitant to even call Spotify's stock an IPO, CNN reported.

While Ek eschews New York Stock Exchange rituals such as opening bell-ringing and trading floor interviews to tout the stock, the front of the 115-year-old Greek Revival exchange building has been draped in a vast green-and-black Spotify banner. The company says the goal is to make investment in the business more transparent. Musicians come for the audience and benefit from data transparency, informing performance decisions, and unique platform opportunities.

Users of streaming music services don't like to rebuild playlists or profiles, making it likely they will stick with Spotify if given good value, according to the analyst. "As such, we expect investors will largely be biased positively on Spotify shares". And the great news is I think she saw how streaming was growing.

Concluded Morris: "We anticipate investor questions will center around the sustainability of Spotify's competitive advantage and technological differentiators versus rivals as well as risks to content costs in future rights negotiations with artists and labels which could adversely impact the company's ability to expand their gross margin".

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