Spotify is joining the ranks of companies listed on the NYSE today by means of an unconventional IPO.
The Stockholm-based company will do things differently because it doesn’t need to raise money, typically the main reason for doing an IPO. Instead, Spotify’s “direct listing” on NYSE will give existing shareholders a way to quickly and easily cash out their stakes in the 12-year-old company.
Banks usually provide stabilization for IPOs, but not in Spotify’s case. The company has forgone bank underwriters to allocate shares to large investors, which helps set the initial pricing for shares. Spotify is leaving it up to the market to find a price without the handholding that banks perform—for a fee—to make sure things go smoothly.
It’s true that Spotify shares will trade publicly for the first time today, however, its equity has been changing hands in private secondary markets for some time. Public trading will reveal whether those prices were accurate and efficient. (Spotify’s share price has ranged from $48.93 to $132.50 this year in private secondary markets, according to PitchBook; NYSE set its reference price at $132, which will be used to help build its order book today.)
Trading started today – Spotify shares are available on CC WebTrader.