Spotify’s stock exchange debut test case for other tech firms
NEW YORK : Spotify Technology's unusual route to becoming a public company is a test case for other multibillion-dollar tech companies that are looking to sell their shares but are not in need of cash.
From yesterday, investors have been able to buy and sell shares in the Swedish music streaming service in the New York Stock Exchange's first-ever direct floor listing.
This is without Spotify having hired investment banks as underwriters and undertaking an investor road show as is typical in a traditional initial public offering (IPO).
If it goes well, other highly valued tech firms expected to pursue a listing in the future, such as US ride hailing companies Uber Technologies and Lyft, could look to adopt a similar approach.
Wall Street banks will also be seeking feedback from investors, and are looking to come up with ways to make up at least part of the millions of dollars in potential lost underwriting fee revenue.
Given the listing's first-of-its-kind nature, observers will be watching to make sure Spotify's public market valuation does not plunge below previous private valuation and trading holds relatively steady.
Spotify can eschew a traditional IPO because it does not require fresh capital and is a popular consumer brand about which the investors do not need educating through a road show.
"This is a big moment for the venture capital industry," said Felix Capital managing partner Frederic Court, a European venture capitalist. "It will enable billions to be returned to investors, which will release more capital into Europe." - REUTERS