Spotify On Wall Street: Opens At $165.90, Closes Under $150

Spotify On Wall Street: Opens At $165.90, Closes Under $150”

After receiving a reference price of $US132 the day prior to the offering, the stock officially began trading at $US165.90 per share at 12:44 p.m. ET Tuesday, netting the freshly public company a valuation of about $US30 billion. Direct listings are typically used for smaller launches, such as for a company emerging from bankruptcy or a public company's spinoff listing shares. That puts the company value at $23.5 billion, and is on target with what CNBC reported last month when shares were traded on private markets were for as high as $132.50 a share.

According to Spotify CEO Daniel Ek, Spotify's IPO doesn't need to be a "splash".

Ek explained his position in a company blog post published yesterday.

"Nothing ever happens in a straight line - the past 10 years have certainly taught me that".

Ek, in an effort to keep the IPO somewhat low-key, was not at the NYSE and did not ring the opening bell.

The company also said it aimed to boost its subscriber numbers by 30 to 36 percent this year.

But Spotify faces rising competition not just from Apple but from retail behemoth Amazon, which has boasted of quick growth for its new service.

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The growth was nearly entirely attributable to the public's embrace of streaming, with subscriptions to paid platforms such as Spotify, Apple Music, Tidal and the new service of retail giant Amazon growing 56 percent to 35.3 million users. With the United States also set to tighten its H1B policies which will make it hard for the tech companies, the recipe is complete for the companies to feel the pinch and this has been placing the pressure on the stock markets.

Spotify declined to comment for this story citing the SEC mandated "quiet period", which restricts companies from making certain public statements during the going public process.

Unlike Netflix, Spotify still isn't profitable, having lost more than 2.4 billion euros ($3 billion) since it started more than a decade ago. "Spotify is a "cool" brand", said eMarketer principal analyst Paul Verna.

Spotify has helped change the way much of the world listens to music by popularizing streaming - unlimited, on-demand songs online.

A Swedish-founded company, Spotify is taking a very unique approach to trading on the Stock Exchange, by trading shares for whatever investors feel they are worth, rather than selling them for fixed price in order to instigate a financial windfall.

By foregoing hiring investment banks as underwriters or holding traditional promotional events with institutional investors, this could lead to extreme trading volatility when formal trading begins, analysts say. The company is using a so-called direct-listing process. That could make it even more hard for investors to settle on the right price for Spotify's stock, they say.

"Our focus isn't on the initial splash". Spotify "will be working on trying to build, plan, and imagine for the long term", he writes, adding that he's excited for the future of his company.

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