By DONNA BALANCIA
Music streaming startup Spotify started trading on the New York Stock Exchange Tuesday at 12:45 p.m. EST and closed the day with a valuation of about $27 billion.
Not bad for a company that hasn’t turned a profit.
Closing out its first day of trading, the music streaming company woke up the NYSE with one of the largest public offerings for a tech company in the history of the exchange. The Swedish startup was founded by Daniel Ek and Martin Lorentzon in 2006.
Spotify, which trades under the NYSE symbol of SPOT, opened its first day on the Big Board at $165.90 a share, giving it an initial value of $30 billion in its public debut. It climbed to $169 a share in the opening minutes and declined to its closing price of $149.01 a share.
On the Spotify blog, co-founder and Chief Executive Officer Ek said Spotify was in the early going and likened the future to a ballgame, saying it was like they are in the “second inning.”
Ek went on to say that Spotify has always been “different” and would continue to do things in a non-conforming manner. The company took a direct listing with the NYSE, rather than the traditional IPO route.
In a traditional IPO, the listing is executed by the company with the assistance of underwriters, who take a commission for their services. With a direct listing, Spotify would not be paying the high costs to underwriters, selling shares directly to the public without intermediaries. Employees, investors and others who hold shares can directly sell shares to the public.
The company filed for the offering last February.
Spotify says it has 159 million active users as of last December. The company operates as a licensed online music streaming service that enables people to listen to music. Spotify says it has paid more than $9 billion in royalties to members of the music industry through the end of 2017.
Some bands have complained that Spotify has not compensated artists. Most notably, Taylor Swift took her entire catalogue off Spotify in 2014. At the time, she said it was more worthwhile for musicians to have iTunes users pay to download music rather than take royalties from Spotify. Spotify changed its model slightly to limit the free ad-supported options and gave musicians the ability to post premium content. However, most users still have free Spotify accounts. And Swift and Spotify have apparently mended their relationship.
The company claims to take in $5 billion a year, but it says almost 80 percent of that money goes to the producers, songwriters, labels and musicians.