Belfast Telegraph

Spotify planning direct listing that stops short of IPO

Music streaming service Spotify is reportedly embarking on an unconventional share listing that stops short of a full-blown initial public offering (IPO).

The company is planning a direct listing this autumn. It will see Spotify register shares on a stock exchange and become a publicly listed company without raising new cash, according to the Wall Street Journal.

Existing investors will be able to sell off their own stakes and shares will be publicly traded, with the price based on supply and demand.

It would save Spotify from paying underwriting fees to launch an IPO, and would avoid diluting the value of existing stakes in the company.

A direct listing could also sidestep a surge in first-day trading that usually takes place after an IPO, which can signal that a company undervalued its newly issued shares.

The tactic is usually used by smaller companies that do not expect high levels of trading in their stock.

Spotify, which last year issued a 1 billion US dollar convertible bond (£801 million), was publicly valued at 8.5 billion US dollars (£6.8 billion) in 2015.

The music streaming service had more than 50 million subscribers as of March and reported revenues of 1.95 billion euros (£1.56 billion) for 2015, though its net loss widened by 7% that year to 173 million euros (£138 million).