Spotify soars in $26 billion stock debut

Spotify Swiss or Swedish? Whatevs says New York flies the wrong flag

Spotify started publicly trading on the New York Stock Exchange on Tuesday.

The popular music streaming service Spotify had an unexpected debut on the New York Stock Exchange (NYSE).

Spotify went public with a large base of paid subscribers. The Swedish company's use of a "direct listing" allows its early investors and employees to sell as many shares as they want whenever they want.

Less certain for investors, however, is Spotify's profitability.

Spotify opted for a rare direct listing rather than a traditional initial public offering, which raised questions around its stock debut.

Leading up to the listing, Spotify had disclosed price history of trading of its private shares, in order to establish its market value ahead of the listing.

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Spotify generated revenue of €4.09 billion (£3.57 billion) last year, up from €2.95 billion (£2.57 billion) the year prior, for growth of 39 percent. Despite launching over ten years ago, the streaming service has yet to turn a profit, due largely to high operating costs, particularly the royalties it pays to artists and record labels to play their music. However, it faces competition from Amazon and Apple and is reliant on the four big music companies which control rights to 87% of the music streamed on Spotify.

In many public listings, and the investors pitch last month, Spotify has spoken about becoming a "platform".

Spotify's drop was a prime example of the general selloff gripping Wall Street, market analyst Neil Wilson said: "The Dow traded more than 400 points lower on the open but was down 600 points at one stage on the futures earlier in the day".

"Normally, companies don't pursue a direct listing". It's not really been a good time for technology stocks, but on the day of Spotify's debut the Nasdaq closed up 1.06%. Its shares have revalued over 80% in the past year.

Since 2006, the firm has expanded to having 157mn users across the globe with 71mn people paying a monthly subscription fee.

Spotify owns about 9% of Tencent Music, a stake valued at €910 million ($1.1 billion), according to a regulatory filing with the US Securities and Exchange Commission.

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