Swedish music streaming giant Spotify went public earlier this year. The results for them doesn’t seem to be on the rise in fact, the firm’s share price hit an all-time day-end low of $114.53 last week on the 21st of December, and at time of publication the next day, it’s sunk by another 4.9% to $108.96.
That, according to Google Finance stats, has resulted in Spotify’s market cap valuation tumbling to $19.73bn.
Recap: Spotify landed on the New York Stock Exchange
Spotify lost valuation of $9bn within 3 months of hitting the stock exchange. This seems to have evaded the most valuable company on the US stock exchange – Apple (current market cap around $1.05tn).
Spotify and its investors, started to feel it coming a while ago.
When Daniel Ek and his company landed on the New York Stock Exchange on April 3, it finished that day with a market cap value of $26.5bn, or $149.01 per share. From there, it was up, up and away: three months later, in mid-July, Spotify’s valuation had topped $33bn, with a share price of over $188. Then, Spotify hit its peak: on July 26, SPOT closed on the NYSE at $196.28 per share, with a market cap in excess of $35bn.
The company was close to topping $200 per share – and Wall Street was licking its lips, waiting in anticipation.
The likes of Sony (which sold a Spotify shares in April for around $750m) and Warner, which sold all of its shares for around $500m before the end of June, looked in danger of kicking themselves. A $200 share price was never reached.
Since that late July peak, Spotify’s share price has fallen dramatically in a low time for tech stocks in general. Three months on from its summer high, Spotify’s valuation was below where it stood at the bell on April 3 with a market cap: $26.1bn.
Spotify and Vivendi’s Universal
Vivendi and Universal Music Group will be watching Spotify’s market cap valuation with particular interest.
Spotify’s performance on the NYSE may be seen by some as an indication of the blockbuster music industry’s health, and therefore a potential influence on UMG’s own valuation.
Vivendi is currently seeking a strategic buyer of up to 50% of Universal – a process it says it wants to have completed by the end of 2019. Will he hear big news next year? The world will be waiting!
Universal also still owns around 3.5% equity in Spotify, and is yet to sell any shares in the streaming business.