Published: Fri, March 16, 2018
Sci-tech | By Spencer Schmidt

Spotify Will Officially Go Public On April 3

Spotify Will Officially Go Public On April 3

Streaming music leader Spotify said on Thursday it has a clear path to profit as it spelled out to investors its growth plans and how it aims to fend off big rivals Apple Inc and Amazon.com Inc ahead of an April 3 listing.

Pieter Swaelens speaking on behalf of BEA Music, said, "The peak of paid streaming music services has certainly not yet been reached in Belgium".

The Stockholm-based company's stock will be available to investors via an unusual direct listing without traditional underwriters. It must convince investors that its business is sound and that investors who buy shares in the public market debut will not be hurt by unexpected volatility.

"You won't see us ringing any bells or throwing any parties", Ek said.

The direct listing is critical to alleviating Spotify's losses, which are driven by financing costs, and will enable all late-stage investors to convert debt holdings into equity.

As part of its goal to reach as many people as possible, the music streaming service said its free, ad-supported tier would remain in place, even as almost 90% of its revenue comes from premium, subscription-based users.

Barry McCarthy, CFO at Spotify spoke about the company's long term operating goals which includes the company targeting a revenue growth of 25 to 35 per cent.

Spotify's F-1 revealed that it finished 2017 with 71m paying subscribers and 159m monthly active users (MAUs). The company's SVP offered up some insight into the health of its music streaming service. That will keep it ahead of Apple, the company believes. But it lost $461 million a year ago.

"The opportunity here is about growth for us and growth for everyone", Cue said, adding that a huge gap exists between the number of people who can afford to pay for music services and those who do. Amazon Prime service subscribers can get the music service for $7.99 a month.

Apple Music is clearly a part of the company's connected home strategy as well, as the centerpiece of its HomePod smart speaker, which finally launched last month.

Because it is not issuing any new shares, it has not set a listing price - which can be used to determine the valuation of a company. Based on private transactions, it is valued at roughly $19-billion, according to Reuters calculations.

Spotify will be giving its first yearly financial guidance on March 26.

Spotify filled a need for both consumers and the music industry, Goodwater said in a report, and that's why it's still around.

Will Spotify's IPO be a hit?

"There is an enormous pay-off for whoever wins".

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