Spotify Is Now A Public Company!

April 3, 2018,  was a big day for music streaming giants Spotify. This company made their debut in the New York stock market this week. The reference price was initiated at $132 a share and trades opening at $165.90. Spotify's last valuation was at approximately $8.5 billion during their last round of financing back in 2015. CNBC had that Spotify shares were being traded at the private markets for $132.5 and would reach a valuation of $23 billion. However, with the trading going up to $165.90, the company had reported a valuation of $29.5 billion.

“Spotify is not raising capital, and our shareholders and employees have been free to buy and sell our stock for years. So while tomorrow puts us on a bigger stage, it doesn’t change who we are, what we are about, or how we operate." - Daniel Ek, the day before Spotify went public

Spotify is the biggest company to ever go public via direct listing, and the first on the NYSE. They reported a revenue of $5 billion last year and a loss of about $1.5 billion. However, with their new deals with the major labels, their losses incurred are expected to reduce. According to documents filed with the US Securities and Exchange Commission (SEC) in the past month, Spotify has registered to make available 55,731,480 ordinary shares on the NYSE. That’s in addition to 106m shares that were already made available by the company under Rule 144a, according to a Spotify spokesperson, leaving 161.96m shares available for trading in total.

Sony Music Cashed In More Than $260 Million Worth of Spotify Shares in IPO

The big news now is major label Sony Music have given away 17.2% of their shares and have taken home $250M for their actions. Sony owned 5.71% of shares in the company. This means almost 1% of Spotify's shares were sold by the record label giants on the second day of the Spotify trading in the NYSE. That remaining stakes makes up around 4.7% in Spotify. Sony maintains the rest of its Spotify stake, said Sony Corp, despite anticipating some ups and downs on the NYSE, is confident of further profit. They predict a total profit on its shareholding, including the stock it sold yesterday, to be 105b just under $1bn. It expects this gain will be recorded in the quarter ending March 31, 2019. Spotify closed day 2 with a valuation of $26.5bn, about $4bn less than day 1 on the NYSE – $149.01 per share.

Sony Music and The Orchard are committed to sharing with their artists and distributed labels any net gain they may realize from a sale of Sony Music’s equity stake in Spotify. This is consistent with our previously announced policy of sharing breakage and equity proceeds from digital catalog licenses with our artists and distributed labels.

Sony was permitted to sell Spotify shares yesterday under the SEC’s Rule 144a which permits non-affiliates of a company, who have owned their shares for at least a year, to sell to qualified institutional investors. See today’s Sony Corp memo to shareholders below.