Top music platform company Spotify Technology SA (NYSE:SPOT) has announced over the past week of its plans to finally become a public company and start offering shares to the public. The company announced its upcoming IPO launch during the first week of April next month.
This was announced by Spotify CEO Daniel Ek who stated that taking a traditional model for the company’s transition into becoming public will not be good for Spotify as the company does not believe in the possible circumstances.
This was due to the current performance of the company whose operations have gone twice as much as Apple (NASDAQ:AAPL) Music which is one of the company’s biggest rivals. Currently the company has almost half of its total users paying for the premium version of the streaming service while its overall users come at more than 159 million listeners every month.
Spotify is expected to launch its IPO on April 3 on the New York Stock Exchange. While the company will soon being listing its shares publicly, the music streaming company has announced that it is not planning to raise a large capital during its share IPO. According to Spotify, it would not be issuing shares but would be allowing its private investors as well as employees in selling their shares to the public.
This would reduce the IPO costs for the company as it would cut out payments made to underwriters or banks who serve as middlemen in underwriting the shares. This may also result in a large price movement in regards to the share price of the company as stocks would not be available should the stock price decline abruptly.
Reports have revealed that shares of the company currently traded in the private market pushes the value of Spotify by around $23 billion. Spotify’s recent filing revealed that the company had a revenue of $5 billion last year on net losses of $1.5 billion. The company has been seen by investors to be successful over the past years due to the promising music streaming service as well as the outlook it offers.
However, the company has failed to give back profits due to the small margins that are usually acquired by music streaming or music provider services. The considerably high revenue of the company were also attributed largely on licensing fees needed to be paid to music publishers or labels.
Despite this, the valuation of the company which was last reported to be at around $8.4 billion is expected to go higher following the official listing of its shares on public.