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Spotify files for IPO amidst increasing competition from Apple and Google
- Spotify has filed to list its shares on the New York Stock Exchange.
- The company is the world’s largest music streaming service with 140 million subscribers.
- Spotify recorded revenue of 4.09 billion euros (roughly $4.99 billion) in 2017, but an operating loss of 378 million euros ($460 million).
After filing IPO documents in December, Spotify has finally announced its plans to go public through a filing with the United States Securities and Exchange Commission. The company intends to list its shares on New York Stock Exchange under the symbol “SPOT.”
The music streaming service has decided against a traditional float and instead opted for a direct listing. This means that the company will not issue new shares, but that investors and employees who already own shares in Spotify can sell these publicly.
According to the statement, shares in the company were sold privately at between $37.50 and $125.00 during 2017 and at between $90.00 and $132.00 from January 1 to February 22, 2018. This, combined with the notion that direct listings are fairly uncommon, means that Spotify has said the price of the shares may be volatile upon their release. It also means the company would be valued at between $19 and $23 billion.
Despite increasing competition from the likes of Apple and Google, Spotify is still the largest streaming service in the world based on the number of paid users.
In fact, as of January this year, Spotify had 70 million paid subscribers. This is almost double the 36 million subscribers that Apple had in early February 2018. Spotify’s free service is thought to have an additional 70 million users.
According to the statement, Spotify’s revenue more than doubled from 1.94 billion euros ($2.36 billion) in 2015 to 4.09 billion euros ($4.98 billion) in 2017. Although, it has also consistently recorded an operating loss that last year stood at 378 million euros ($460 million).
There are other challenges facing Spotify, though: despite its dominance worldwide, Apple Music is reportedly gaining subscribers at a higher rate in the US. This has led to suggestions that Apple could become the number one streaming service in the US as soon as later this year.
Other concerns listed by Spotify include the fact that it depends on third-party licenses from record labels and music publishers and that there is no guarantee that the licenses available now will continue to be available in the future.
In our comparison of the three main music streaming services, Spotify came second behind Google Play Music and ahead of Apple Music. Find out why here.