Spotify Stock Opens Higher Than Expected, Valuing Company at $30 Billion
Spotify's first public trade as part of its direct listing on the New York Stock Exchange was executed at 12:43 p.m. on Tuesday, with the company's stock opening at $165.90. The NYSE had set a reference price of $132 and indications pointed to shares trading as high as $155.
Not long after its first trade, the stock dipped about 3 percent to $160 as holders looked on to see where things would land before making a move and market onlookers gauged demand. With shares currently trading in the $160-$163 range, Spotify's market value opens at just under $30 billion.
Spotify CEO Daniel Ek sought to manage expectations, saying he expects a bumpy road. "Nothing ever happens in a straight line — the past ten years have certainly taught me that," Ek said in a blog post Monday evening.
Ek, in an effort to keep the IPO somewhat low-key, was not at the NYSE and did not ring the opening bell. Instead, he sat down for one interview, with CBS This Morning, where he played down concerns about competition with Apple Music and detailed how the company repaired its relationship with Taylor Swift.
Spotify has struck a chord with 71 million worldwide subscribers so far and is aiming to increase that number to as many as 96 million subscribers by the end of the year. By comparison, Apple’s nearly 3-year-old music streaming service has 38 million subscribers. A list of other formidable competitors that includes Google and Amazon also offer similar music streaming services, raising the specter of Spotify being wiped out by far richer rivals.
In recent months, Spotify has warned that initial trading could be volatile and that the share price could "decline significantly and rapidly" out of the gate, once public. That's because the company is not offering new shares at a price range published by underwriters as it would in a traditional IPO, but rather allowing existing stakeholders to sell their shares to the public. If most of them unload, the price would drop; if most hold on, the price would rise.
"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," Ek said in his blog post Monday. "Our focus isn’t on the initial splash. Instead, we will be working on trying to build, plan, and imagine for the long term."