Spotify is finally ready to go public. The streaming music giant filed a confidential registration with the Securities and Exchange Commission in late December, with the intention of listing its shares on the New York Stock Exchange in the first quarter of this year, according to two people briefed on the company’s plans who were not authorised to discuss them.
As expected, Spotify will pursue a direct listing of its shares, an unusual process in which no new stock is issued – and therefore no money is raised – but existing investors and insiders can trade their shares on the open market. Such a listing would bypass much of the bureaucracy of a standard initial public offering, saving the company time and potentially millions in underwriting fees.
The move, if it goes forward as planned, would be the most prominent music-related listing since Pandora Media’s initial public offering in 2011, and would recognize Spotify, which began its service 10 years ago, as a transformative force in the music industry. After some 15 years of decline, revenues of recorded music sales began to recover in 2015, largely thanks to streaming.
Spotify’s registration was previously reported by Axios. A Spotify spokesman declined to comment. When it last raised money from investors, in 2015, Spotify was valued at $8.5 billion (€7 billion). Its current valuation is not clear. According to reports, it has been valued at as much as $19 billion, based on private transactions.
In the United States, streaming services like Spotify, Apple Music and Amazon Music account for more than two-thirds of the business, according to Nielsen, and are still growing rapidly. Spotify is by far the most popular audio streaming outlet, with at least 60 million paying subscribers around the world and an additional 80 million who use its ad-supported free version, according to the company’s most recent public statements.
Despite Spotify’s size, it has never turned a profit, and music licensing costs are still its greatest expense. In 2016, Spotify had about $3.3 billion in revenue, up 52 per cent from the year before, but its net loss also grew sharply, to about $600 million, according to its most recent filings with European regulators. The company is based in Sweden.