Music streaming giant Spotify has planned their initial public offering for today and if it goes through it has the potential to change how IPOs are performed in the future. Instead of following Wall Street’s preset guidelines, Spotify has chosen to take their own path.
After more than 12 years in business as one of the first and leading streaming services for music, Spotify is finally ready for an IPO. Later this afternoon, at 02:30 PM Eastern Standard Time, Spotify will be publicly traded on the NYSE for the first time ever.
What makes this IPO special compared to other companies public listings is that Spotify has done all the work on their own. In most cases, a company that wants to list on an exchange hires one or several banks to help them with the process, both before the listing but also to stabilize the stock price after the listing. Spotify, on the other hand, has done it pretty much on their own even though they have a few bankers helping out with the case. The NYSE even changed some of its rules to accommodate Spotify.
This means that if the IPO is successful it could change the environment for future IPOs and it would take some of the power away from Wall Street bankers. It would also make it easier for companies to become publicly listed since they wouldn’t have to pay fees to the banks.
What Could the IPO Mean for Spotify?
The need for additional funding is one of the main reasons why the company is seeking an IPO today. Moreover, Spotify CEO, Daniel Ek, is putting himself in a tough spot by going public right now. You see, Spotify has struggled to make a profit for a long time and they have especially hit a rough patch in the past few months. But after going public, investors will expect to see growth quickly. Also, Daniel Ek has expressed that it’s not the initial listing that they are focused on but rather the long-term goals, and it seems like Spotify’s management has a good plan of what to do next.
In our opinion, it’s nice to see a company who dares to step out of the box instead of following the norm when it comes to public listings and stock trading companies. We have our hopes up that a trading debut on the NYSE will give Spotify the boost they need. However, experts are understandably concerned about the decision to perform an IPO during the rocky market conditions we are experiencing at the moment, and thus we can expect an unstable introduction.