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Tuesday, April 3, 2018

Spotify IPO Is A Hit


Spotify's (SPOT) IPO debuted at a price of $165.90 per share on Tuesday, giving the company a market value of approximately $29.5 billion, according to CBS News.

Since its launch in 2008, the company has defied convention, building a music-streaming service with millions of users and plenty of hype. And for its IPO, it opted for an unconventional "direct listing," bypassing Wall Street firms.

In fact, unlike other IPOs, the Spotify founder didn't even ring the opening bell at the New York Stock Exchange.

Founded by Daniel Ek, a startup veteran who began his first company at the age of 14, Stockholm, Sweden-based Spotify has weathered its share of controversies, including tussles with powerhouse artists like Taylor Swift over how much they are paid for their work.

In an interview with CBS This Morning, Ek said that while he would look at the stock price when it opened, he felt the company is only in the "second inning," emphasizing his focus on the long term.



Investors eyeing Spotify are chiefly concerned with two things: The company's profitability, and the steep competition from tech titans such as Apple Music, Amazon Prime and Google Play.

Spotify is banking on strong subscriber growth for a boost -- for 2018 it expects its number of premium subscribers to hit 92 to 96 million.

Spotify earned 90 percent of its roughly $5 billion in revenue in 2017 through its paid subscribers; the rest was made up by ads for its 'free' music product.

Still, the company isn't profitable. It reported a loss of $1.5 billion last year. One big reason is the money it spends on licensing content. Spotify estimates it has paid artists $8 billion over its short history. The company has said it pays nearly 70 percent of its revenue to the music community.

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