All eyes on Spotify as it debuts on the stock market

Bloomberg Deals reporter Alex Barinka breaks down the beats of Spotify’s direct listing

In its end of the year report, the Recording Industry Association of America reports that subscriptions for streaming services such as Spotify had exploded from 7.7 million in 2014 to 35.3 million in 2017. By 1:30pm EDT, the Wall Street Journal was reporting that Spotify was now valued at $30 billion, meaning that this could prove to be the third-largest IPO ever after Alibaba and Facebook. Spotify has a unique case due to its stock structure. Instead, the event known as a "direct listing", is a collection of transactions from existing shareholders (like employees and investors) selling shares directly to stock market investors.

Shares were last indicated to trade between $150 and $160.

In the USA, subscribers can pay $9.99 per month for a standard music streaming plan, or $14.99 for a family plan with up to five accounts. "Spotify is a "cool" brand", said eMarketer principal analyst Paul Verna.

The shares quickly wobbled in their first hour of trading, though remain well above the NYSE's reference price of $132.

A $10,000 investment in Netflix's 2002 initial public stock offering would now be worth more than $2.6 million, leaving some investors wondering if Spotify might be on a similar trajectory in music streaming.

Spotify went public on Tuesday through a so-called direct listing.

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For Spotify, the direct listing process will save money by minimizing the role traditional Wall Street banks play in the process.

Follow Spotify's movement on the NYSE.

"This won't be replicated often", Matt Kennedy, an analyst with Renaissance Capital, told CNN. It has about 71 million paying customers and hopes to increase that to 96 million.

Track Spotify's stock in real time here.

Ek said his company chose to skip the IPO phase because he wasn't interested in "the pomp and circumstance". But what's even more important to me is that tomorrow does not become the most important day for Spotify. The opening price puts the company's value at almost $30bn, making it one of the largest USA listings for a tech company in history. These investors typically see the value of their shares rise quickly and sell them, pocketing a quick profit, he said. The stock market has also been volatile recently with the Dow Jones industrial average falling more than 450 points, or almost 2 percent, Monday.

For its public offering, Spotify has taken an unconventional and somewhat risky approach called direct listing, a route normally taken by small-cap companies, usually in biotech and life sciences. That could make it even more hard for investors to settle on the right price for Spotify's stock, they say. As much as this sounds like great news, what does this floatation really mean for the company?

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