Spotify has decided to move forward with a direct listing, rather than a traditional IPO, when it goes public later this year or early next, according to multiple reports. While the music streaming service declined to comment on timing, a spokesperson did confirm it has hired Morgan Stanley, Goldman Sachs and Allen & Co to advise on a possible listing on the New York Stock Exchange.
Spotify was last valued at $8.5 billion nearly two years ago, when it had 20 million paid users. Now boasting more than 50 million subscribers, as well as recent licensing pacts with Universal Music and indie network Merlin, that value has risen to around $13 billion, according to a Reuters source.
A direct listing would give Spotify a way to list on the NYSE without raising any new money or issuing new shares to public investors. For a member of the public to get in, a member of the company would have to sell their share. That lack of public shares would give Spotify the ability to avoid paying the kinds of hefty underwriting fees associated with IPOs on the exchanges. Further, employees could sell their shares without Spotify having to pay underwriters.