Spotify Begins Trading On NYSE

Apple or Spotify? Two DJs battle it out

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Ek explained his position in a company blog post published yesterday.

That is certainly likely to be the case in shares of this business.

While Ek eschews New York Stock Exchange rituals such as opening bell-ringing and trading floor interviews to tout the stock, the front of the 115-year-old Greek Revival exchange building has been draped in a vast green-and-black Spotify banner.

RBC Capital Markets analyst Mark Mahaney is among the analysts that have already stepped up to the plate with some thoughts on Spotify.

The streaming giant isn't using the traditional IPO process for its public offering, but instead a rarely-used process called a direct listing that comes without underwriters. Estimates for the price of the shares once they hit the public market were between $160 and $220, CNN reported.

Goldman Sachs, Morgan Stanley, and Allen & Co. were brought on just to play advisory roles. "If Spotify is getting too profitable they can simply jack up royalty fees".

There's also another significant difference between Spotify's direct listing and the traditional IPO approach. "Everyone can make it and there are more people consuming it than ever before".

This is to prevent the market being flooded with shares, but will not apply in this instance. The company was founded in 2006 by Martin Lorentzon and Daniel Ek, who remains its current CEO.

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So there are a lot of reasons why trading in these shares will be more choppy than usual.

The first, most obviously, is to save money. However the listing will allow investors to put a public value on their holdings.

Thomas Farley, NYSE president, told CNBC on Tuesday that the exchange was "in no rush" to price Spotify's offering. Company executives did not conduct a roadshow to convince big institutional investors, such as pension and mutual funds, to buy shares. Many in both the tech and music industries are watching the stock closely.

Last year, Spotify shares were traded privately between $37.50 and $125, the company said in its F-1 filing.

"They are assuming based on where it is trading in the grey market and what it appears right now as supply and demand, around US$132 should be a fair price", an equity trader said on Tuesday.

Its exit price means that the firm achieved a 2.4X return on it investment.

And, having looked at those examples, Spotify might legitimately ask how much worse it can do. They don't even know what to call the event. Dropbox, Airbnb, and Uber are all moving closer to jumping from private to public.

The company is expected to be valued at $20-$25 billion, although the listing is also something of a plunge into the unknown for potential investors.

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