02 March 2018

INVEST - The Unique Spotify Direct IPO on the NYSE

Spotify IPO Tests the Market Value of a Platform Based Streaming Service 


Spotify LogoSwedish based streaming service, Spotify is organizing a direct listing on the New York Stock Exchange according to a recent F1 prospectus

The company lost $1.5 billion in 2017 but is well ahead of Apple's streaming service, with 71 million paying subscribers and more than 159 monthly listeners. Recent transactions show the company shares selling at more than US$132 per share.

A direct listing is different and somewhat unique as there is no underwriter of the listing. The Spotify shares will be listed for trade and the market value of the shares will be determined by the number of shares available for sale and the demand from prospective investors.

Spotify was founded in Stockholm, Sweden during 2006. Wikipedia provides the story of this music, video and podcast streaming service. The popularity of Spotify on Amazon's Alexa appears to be high and rising. Platform based offerings have become the most effective business models of the digital economy.

InfoStream is watching this listing with particular interest. It may help determine if the build/own model is sustainable. Partnering with an operator of an existing platform and ecosystem such as Amazon has distinct benefits because of discoverability and the appeal of being listed with a broader suite of products and services. It seems consumers desire to move away from the profusion of single use apps jamming their digital devices to support a smaller number of apps that meet their needs. 

Analysts seem to suggest the Spotify shares will have good support since there are a lot of investment dollars on the sidelines. Investors are keenly watching this development to understand the value of a platform based streaming business in the digital economy. InfoStream is watching the direct listing model to understand if it will disrupt the more common route to an IPO requiring underwriters and placement agents.

Important Links:



No comments:

Post a Comment