Author: BEN SISARIO and MATT PHILLIPS / Source: New York Times
Spotify is a hit.
On its first day of trading on the New York Stock Exchange, the music streaming service finished with a valuation of $26.
5 billion. The share price closed at $149.01, giving Spotify a market value similar to that of companies like M&T Bank and General Mills.For the music business, Spotify’s listing on the Big Board symbolized the ascent of streaming as the new dominant format. It also represented some rare good news for an industry deeply affected by technological change. Buoyed by subscriptions from services like Spotify and Apple Music, record labels have begun to have significant revenue growth for the first time in nearly two decades, drawing attention from investors.
“There’s a healthy appetite among public market investors for streaming media assets,” said Rob Sanderson, an analyst at MKM Partners.
The stock opened trading at $165.90, meaning that Spotify was valued at $29.5 billion to start the day, before declining gradually through the afternoon.
Among Wall Street traders, Spotify’s debut as a public company drew attention for the way it decided to list its shares. It went with a so-called direct listing approach, a rare process that eschewed the usual circus — and safeguards — of a standard initial public offering.
Typically, a company lists its shares publicly as part of a broader plan to raise fresh cash for acquisitions or other investments. Spotify chose not to raise any new funds by issuing shares, which would have diluted the value of existing stakes owned by shareholders.
Instead,…
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