Spotify has solid list debut

Marcus Newton
April 5, 2018

Shares of the music-streaming service fell about 10% from the price they opened at Tuesday.

Spotify opted for a rare direct listing rather than a traditional initial public offering, which raised questions around its stock debut. Tuesday's first day closing price of $149.95.

Spotify shares opened at $165.90, up almost 26 percent from a reference price of $132 set by the NYSE late on Monday. However, its market value is still in the top ten for tech companies after one day of trading.

"Spotify's strong market debut shows that investors regard it as a healthy and promising business, and it's easy to see why", eMarketer analyst Paul Verna told FOX Business. The investment firm hasn't sold any shares, said the person, who asked not to be identified because the information isn't public.

After hitting an intra-day low of $134, which was just above the reference price set on Monday before their debut on the floor, they were rebounding, paring their initial drop to trade -1.41% lower at $139.

The company's path to Wall Street traveled a road littered with failed music streaming service companies.

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By the end of the session, Spotify's market valuation was $26.5 billion.

Spotify has 71 million so-called premium subscribers, including users who have given the company a credit card number for a free trial. But though Millennials are also a key demographic for Spotify, the Swedish company's listing did not draw disproportionate interest from that generation.

For artists, particularly smaller, independent acts, this serves as a chance to enter into beneficial agreements with the service even if they are not associated with a major music label.

In the case of Spotify, it has opted for a so-called "direct listing". But it may not be enough to carry the company to big profits, he said in his report on Wednesday rating the shares "neutral".

What's unusual about Spotify's direct listing on the stock market this week is that company insiders are not required to hold onto their shares - in what's called the lock-up - for an extended period of time. Below, we take a look at some of our forecasts for Spotify over the next two years.

Other reports by MaliBehiribAe

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