Spotify valued at $30bn in Wall Street debut as stocks soar 25%

Spotify valued at $30bn in Wall Street debut as stocks soar 25%

Instead, Spotify is conducting a direct listing in which it will not raise money, but will allow employees and investors to sell their shares.

The company traded between $48.93 and $132 a share over the past year through private transactions. As Spotify CEO Daniel Ek pointed out, nothing the music-sharing application has done can be quantified as "normal".

Additionally, while traditional IPOs feature executives on the trading floor to ring the bell and speak with reporters on why the stock is a worthy investment, Spotify's team was absent from the NYSE. In fact, some industry insiders are of the mind that Apple Music may boast more paid subscribers than Spotify as soon as this summer.

Apple said subscriptions have maintained a monthly growth rate of 5 percent and they have 36 million subscribers in the United States.

The Dow Jones industrial average and the S&P 500 were down almost 3 percent on Monday, and the tech-heavy Nasdaq had erased its gains for the year.Stocks got slammed on Tuesday with tech stocks dragging in the market as Amazon (AMZN) dropped 5% and was again in the headlines following a tweet from President Donald Trump.

Spotify is basically trying to recreate the secondary market activity that happened before it went public. Netflix is worth about $122 billion.

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Drew Pascarella, lecturer of finance at Cornell SC Johnson College of Business, says that Spotify's unorthodox listing is a one-off, unique situation as the company does not resemble classic pre-IPO firms.

Spotify, which was founded a decade ago, is the world's largest music streaming service and has more than 71 million subscribers.

"Spotify has been the driving force in nothing less than a turnaround in the USA recorded music industry", Verna said. Instead it simply listed existing shares directly on the stock exchange without relying on underwriters to attract investors, set a price and stabilize the stock as it begins trading.

The company is going public through a direct listing on the NYSE, skirting the initial public offering (IPO) model that most companies pursue.

"Spotify is floating on the stock market at a pretty inauspicious time for the tech industry, which has been rocked by the Facebook data scandal and now potentially faces greater regulation as a result", said Laith Khalaf, senior analyst, at Hargreaves Lansdown. The opening price puts the company's value at almost $30bn, making it one of the largest U.S. listings for a tech company in history.

"While this is obviously a big day and I'm very proud of my employees, I really just feel like we're in the early days, not celebrating the end days as so many other companies are doing", Ek said.