Spotify Valued at $30 Billion in Stock Market Debut

Spotify Valued at $30 Billion in Stock Market Debut

Spotify offers access to vast libraries of music rather than making users pay for CDs or downloads of individual albums or tracks.

Typically, companies seeking a stock market listing hire investment banks to sell shares on their behalf and brokers help match buyers and sellers to make sure that the stock does not have a volatile debut.

Unlike a traditional IPO where employees don't sell shares for months, known as a "lock-up", Spotify insiders are already allowed to sell.

CEO and co-founder Daniel Ek has voting power that represents 23.8% of the company.

In the filing, Spotify declared that it had contributed hugely to reversing the downward financial trajectory of the music industry, while also arguing that music streaming would continue to be big business for the industry.

Despite the company's impressive growth, not to mention its focus on diversifying its revenue streams, the company faces a serious challenge from Apple Music, Apple's own streaming service.

Music sales soared anew past year in the United States backed by the rise of streaming, bringing revenue to a level last seen a decade ago.

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Stay up to date with all of the artists featured in the CMU Approved column by subscribing to our Spotify playlist. It has about 71 million paying customers and hopes to increase that to 96 million.

Spotify went public on Tuesday through a so-called direct listing.

Google and Amazon are also attempting to muscle in on Spotify's business. Apple Music, however, was growing at a much faster rate than Spotify: 5% versus 2%. Some 91 percent of Spotify's 178 million shares were tradable, a much higher percentage than typical in a traditional IPO.

Spotify has been compared to streaming entertainment service Netflix for its growth potential.

While Ek eschews New York Stock Exchange rituals such as opening bell-ringing and trading floor interviews to tout the stock, the front of the 115-year-old Greek Revival exchange building has been draped in a vast green-and-black Spotify banner. Most pre-IPO companies don't have shareholder bases that look like that of Spotify.

"Nothing ever happens in a straight line - the past ten years have certainly taught me that". Instead, the company made the decision to simply list existing shares, which made it hard for anyone to predict the price the shares would initially go for.

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