According to a report from Techcrunch, music streaming service Spotify has filed its long-awaited IPO, targeting $1 billion. However, in a departure for a company filing its initial listing, Spotify won’t be selling its shares to the public, instead it will sell its shares directly to stock market investors from existing shareholders.
While the company lost 1.2 billion Euros in revenue last year (somewhere in the ballpark of $1.46 billion USD), its revenues were 4.09 billion Euros (around $5 billion). Its shares traded on the private markets for between $90 and $132.50, however, those share prices will not be likely to affect the asking price once the shares hit the New York Stock Exchange under the listing of “SPOT.”
Spotify mentioned some of the risks in its filing, including the fact that “some of our competitors, including Apple, Amazon, and Google, have developed, and are continuing to develop, devices for which their music streaming service is preloaded”. In other words, not having an iPhone, Nexus, or Echo device of its own may make it more difficult for Spotify to grow its subscriber base, while its competition will produce new users natively each time they sell one of their devices with the respective service installed already.
Spotify also pays for licenses, which could affect its costs as rights-holders continue to negotiate for better percentages of the profits. However, Spotify counters some of those risks by claiming “a key differentiating factor between Spotify and other music content providers is our ability to predict music that our Users will enjoy.” With its Rap Caviar list and Secret Genius initiatives making waves and determining the current and future trends, its hard to argue.
Spotify’s listing is expected to go public sometime in late March or early April.