Spotify is done with its long-awaited “direct listing” experiment. The music streaming company went public without the IPO.
After completing its first trade halfway through the day at $165.90, Spotify fell to $149.01, 10 percent beneath the open. It was a down day on the stock market, but at a $26.5 billion market cap, it’s up from the private market trading that happened in the months leading up to the IPO.
The top end of that range, $132, was used as a “reference point,” valuing the company at $23.5 billion. Because there was no IPO price, that demarcation is being used to say that Spotify traded up about 13 percent on its first day.
Yet while it achieved a desirable market cap, some on Wall Street are puzzled as to why Spotify would want to go public without raising money.
One myth that’s been floating around is that Spotify did this to avoid paying bankers. In fact, they worked with Morgan Stanley, Goldman Sachs and Allen & Co. in the lead up to the debut.
They did not eliminate the investment banks, but they did manage to avoid the dreaded “lock-up” expiration, which is when most employees and insiders are allowed to sell shares. This is usually about six months after an IPO, and it often puts downward pressure on the stock in anticipation of the event.
For more on how Spotify could earn enough to thrive as a public company, read our feature piece:
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Original Post Here: Spotify traded down 10% on first day, achieved $26.5 billion market cap
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Spotify traded down 10% on first day, achieved $26.5 billion market cap was originally posted by 31 T4T FanZone
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