Spotify sees big Wall Street debut amid tech sector turmoil
Swedish streaming giant Spotify debuted on Wall Street with a bang, offering a bright spot amid dark times for technology stocks.
The company’s shares surged more than 25 per cent above the Wall Street Stock Exchange’s reference price of $132 (£94) to $165.90 (£118) a share. That translated into a $29.5bn (£21bn) valuation for a company now trading under the ticker symbol SPOT.
Rather than opting for an initial public offering, Spotify engaged in what’s known as a direct offering, which is not underwritten by banks. Founder Daniel Ek noted in a blog post ahead of the offering that existing shareholders have already been able to buy and sell stocks.
“Normally, companies ring bells”, Mr Ek said. “Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment. Normally, companies don’t pursue a direct listing. While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company.”
In the months leading up to the offering, Spotify moved to strengthen its market position by signing licensing deals with a number of major music labels. Spotify executives believe a shift to streaming music can help revive the music industry’s flagging fortunes.
“Spotify was founded on the belief that music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans”, the company said in a registration filing.
Spotify’s robust showing contrasted with a tumultuous stretch for technology stocks, which have played a key role in dragging down the markets amid regulatory jitters.
A public outcry over the news that some 50 million Facebook users’ information ended up in the hands of political consulting firm Cambridge Analytica has spurred elected officials in the US and Europe to call for tighter rules.
Technology stocks have tumbled in recent weeks as investors became increasingly wary about the possibility of a government crackdown. Facebook officials have helped stoke those fears, with both CEO Mark Zuckerberg and COO Sheryl Sandberg embracing the possibility of more regulation.
Amazon has also taken a hit after Donald Trump publicly slammed the online retail giant and repeatedly suggested it should pay more in taxes. The president renewed his assault on the same day as Spotify’s offering.
But Spotify’s big day was not all smooth. After a Swiss flag was hoisted in front of the New York Stock Exchange, astute observes noted that the company is Swedish.
Independent News Service