It’s all a bit fresh, but Spotify just made the IPO and the opening of the share is now around $ 160, giving the company a market value of just under $ 30 billion. However, it has been a strange process: normally an IPO means that your share can be sold and bought on the large share markets, but that was not the case with Spotify: only existing shareholders could trade the shares with investors.
This is far from your standard IPO. In the longer term, however, that does not matter much, because if Spotify is doing well, that share will automatically rise. Whether that will be the case is, of course, the question. It is well known that Spotify is still far from profitable because they have to subsidize every subscription (especially the free version).
In numbers: Spotify had sales of four billion euros in 2017, which was more than a billion more than the year before. The loss, however, rose even faster: where that amounted to 540 million euros in 2016, it was 1.2 billion euros last year. The question is how many investors still want to pump into the company in the hope that the business model will become profitable once. That model of subsidizing is taken to the market and then making a profit is used a lot: Uber also uses it for example. And to be honest: as long as the (paying) users continue to grow it will eventually be fine.
That aside, it seems that the market value of Spotify is slowly lowering in the first few hours, so do not be surprised if tomorrow there is a very different figure than 30 billion behind Spotify. According to co-founder and CEO Richard Ek it does not matter that much: the IPO is not meant to make everyone suddenly rich or to raise a lot of money. Everyone could already trade Spotify shares for a long time, only the company was not listed on the stock exchange. That has now changed, but otherwise nothing changes according to Ek. There are ups and downs, he says, and that’s fine. Spotify continues with what they were doing and we know quickly enough whether the market has the confidence to continue to support that.