Spotify Share Price Makes History with Stock Market Debut

The stock rose 19% to US$156.80 at 2.07pm in New York from the $132 reference price set by the New York Stock Exchange well before the price discovery process started.

The error was quickly rectified, with the yellow and blue Swedish flag taking the place of the Swiss cross.

Nonetheless, in the run-up to its stockmarket debut analysts were already warning warned that - regardless of what was happening in the rest of the market - trading in Spotify shares was likely to be volatile due to the low liquidity resulting from the company's chosen method of floating - a direct listing.

"Today's stock performance is no guarantee of future success, and it's important to remember that Spotify is not yet profitable and faces intense competition from more diversified players like Apple, Google and Amazon, all of which are pushing voice-activated devices that prioritize their own music services", Verna said.

Among the majors, Sony had the largest share in the company, with about 5.7 percent, according to Spotify's prospectus.

The company's launch comes at a hard time for the U.S. tech sector, as a series of political scandals surrounding companies including Facebook and Amazon has seen share prices tumble in recent weeks.

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Dropbox shares surged over 35% to $28.48 on their first day of trading on 23 March and last night closed at $31.59, valuing the business at $12.9 billion. "Spotify has been a driving force in the turnaround of the US recorded music industry over the past few years". Trading under the symbol SPOT, the Swedish company's losses grew to 1.235 billion euros ($1.507 billion) a year ago, its largest ever. Normally, companies don't pursue a direct listing.

As of December, Spotify revealed it had more than 71mn paying subscribers alongside 159mn monthly active listeners, driving its revenue that reached just short of $5bn in 2017.

The unusual listing thus added to the suspense over how Spotify would fare on the market as the company has yet to turn a profit.

While Chief Executive Daniel Ek skipped NYSE 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 was draped in a vast green-and-black Spotify banner.

"Nothing ever happens in a straight line - the past 10 years have certainly taught me that".

Spotify has yet to turn a profit in its almost 10 years of existence, and the company even warned last week that it might see its sales growth slow in 2018, although it remained hopeful of achieving a lower annual loss.

  • Ronnie Bowen