Spotify Goes Public with Direct Listing

Spotify is opting for a direct listing instead of a traditional IPO, allowing existing shareholders to sell directly to the public without the company issuing new shares. This approach skips the typical IPO process of price discovery and marketing roadshows. While direct listings are rare and risky, Spotify is confident in its market position. The company was valued at $8.5 billion in 2016, with recent private transactions ranging from $6 billion to $23 billion. Spotify aims to increase subscribers and revenue but faces significant operating losses. Co-founders will retain super voting power, and the streaming market is expected to grow significantly by 2030.

What is the main difference between a direct listing and a traditional IPO?

• In a direct listing, the company sells new shares.

• In a direct listing, existing shareholders sell their shares directly to the public.

• A direct listing involves a marketing roadshow.

• A direct listing requires setting a final share price before trading.

Why might a company choose a direct listing over a traditional IPO?

• To avoid the share price discovery process.

• To ensure a higher initial share price.

• To increase the number of shares available.

• To conduct a marketing roadshow.

What is one potential risk of a direct listing for a company like Spotify?

• The company will have to sell new shares.

• The stock may experience significant price volatility.

• The company will have to conduct a roadshow.

• The stock price may remain stable.

What subscriber growth is Spotify promising by the end of the year?

• Up to 50 million subscribers.

• Up to 80 million subscribers.

• Up to 96 million subscribers.

• Up to 120 million subscribers.

What control will Spotify's co-founders have after the listing?

• They will hold shares with super voting power.

• They will have less voting power than other shareholders.

• They will have equal voting power as other shareholders.

• They will have no voting power.