<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=192888919167017&amp;ev=PageView&amp;noscript=1">
Friday,  April 26 , 2024

Linkedin Pinterest
News / Business

Spotify’s unusual IPO to sell existing stocks instead of issuing more

By MICHAEL LIEDTKE, Associated Press
Published: March 4, 2018, 6:00am

SAN RAMON, Calif. — Music-streaming pioneer Spotify is hoping to attract a new crowd of fans on Wall Street as its competition with Apple heats up.

Spotify is pursuing an unusual initial public offering that will sell some of its existing stock instead of issuing more shares to raise money. The strategy will make it easier for Spotify’s existing stockholders to cash out of their investments while creating a potential new financial channel for the company.

Having a publicly traded stock could also draw more attention to Spotify and its music service as it tries to fend off a growing competitive threat from Apple, the world’s most valuable company and one of its best-known brands.

Spotify indicated $1 billion worth of stock will be traded on the New York Stock Exchange, although the amount is likely to be much higher, based on information contained in documents released Wednesday. The Luxembourg-based company took its first steps toward an IPO in a confidential filing a few weeks ago.

The numbers revealed Spotify’s music-streaming service boasts 71 million subscribers, nearly twice as many as Apple’s rival service.

But Spotify still isn’t profitable. The Luxembourg-based company lost 1.2 billion euros ($1.5 billion, based on the latest currency exchange rates) on revenue of 4.1 euros last year. By comparison, Apple earned $46 billion on revenue of $216 billion in its last fiscal years, thanks to the success of iPhones, iPads and other products that finance its music subscription service.

Although it has been outgunned financially, Spotify has been able to stay a step ahead since Apple launched its music-streaming service in 2015. Since then Apple has attracted 36 million music-streaming subscribers, according to CEO Tim Cook.

But Spotify has added 43 million subscribers since Apple Music’s debut. That suggests the main impact of Apple’s entry into the market may have been to normalize the idea of paying monthly fees for music. Amazon and Google also offer music-streaming services.

Loading...