Spotify (SPOT) is set to officially go public tomorrow, and the first day of trading will be terribly important in spelling out the future of the company. In all it’s years in operation, the streaming service has never actually reported any earnings. (It has combined losses of over $1 billion over the last three years.) Due to that fact, it will be difficult for investors to gauge the safety of the stock. In fact, many analysts argue that the initial offering and following weeks could prove to be quite volatile.
Spotify is expected to be valued somewhere between $20-25 billion at time of IPO tomorrow. The price of shares won’t be known until they’re available to trade because Spotify is not issuing any new stock.
As The Guardian points out, investor interest in Spotify will directly correlate with the trust investors have in the company. Fortunately, Spotify is experiencing significant growth at the moment.
“[Revenue is] up from €746m in 2013 to a predicted range of between €4.9bn and €5.3bn last year,” writes The Guardian. “It has an estimated 40% share of the global share of music streaming, giving it increasing bargaining power with labels and artists over the royalties it pays them.
“User numbers are expected to increase from 157 million to 170 million this year, with paying subscribers slated to increase from 72 million to 90 million.”
All told, everything will be revealed tomorrow morning when the market opens.
Spotify’s “mint” playlist
via The Guardian