Spotify Confidentially Files For U.S. IPO, Hits 70 Million Subscribers

Kelly Baker January 05, 2018
Spotify Confidentially Files For U.S. IPO, Hits 70 Million Subscribers

Music streaming service Spotify, which filed confidentially with U.S. regulators for an initial public offering on Wednesday, has 70 million subscribers, it said in a tweet on Thursday.

The music streaming company has filed confidentially with U.S. regulators for an initial public offering and is targeting a direct listing in the first half of 2018 that would allow some longtime investors to cash out.

If Spotify, which was valued at as much as $19 billion last year, goes ahead with its plans, it would be the first major company to carry out a direct listing, an unconventional way to pursue an IPO without raising new capital.

Direct Listing

A direct listing mainly eliminates the need for a Wall Street bank or broker to underwrite an IPO along with any associated fees and could change the way companies approach selling shares to the public.

The confidential filing was initially reported by news outlet Axios.

The U.S. Securities and Exchange Commission now allow all companies, regardless of revenue, to file a draft IPO registration statement confidentially before they unveil their financials.

Record industry sales have increased for three years in a row thanks to the legions of consumers paying to listen on Spotify and Apple Music. Their spending has far outstripped shrinking album sales in retail outlets and online stores like iTunes, allowing the $15.7 billion global business to prosper again after years of decline. Analysts project revenue could more than double over the next decade.

Spotify built the most popular on-demand music service in the world, outflanking the largest technology companies, including Apple, and is trying to prove it can prosper without being a vehicle to sell mobile phones or other products.

A direct listing, usually done by much smaller companies, is risky, and Spotify is trying to pull off the biggest one ever. Most would-be stock issuers hire investment bankers to underwrite their shares and go on a roadshow where they raise money by touting their future to potential investors.

Spotify isn’t trying to raise capital. It’s seeking a listing so existing investors can begin selling their shares. Without the roadshow, the company and its bankers won’t have much control over where the shares begin trading or as much insight into the thinking of investors.

Copyright Lawsuit

Spotify was sued by Wixen Music Publishing Inc last week for allegedly using thousands of songs without a license and compensation to the music publisher. Wixen is seeking damages worth at least $1.6 billion. Nevertheless, Spotify intends to proceed with a U.S. direct listing in the first half of 2018 despite the lawsuit.

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Kelly Baker


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