Spotify, the popular music streaming service based in Sweden, is hoping to record a hit of its own when it looks to forgo an initial public offering and list shares directly to the New York Stock Exchange later this year or in early 2018.
A source declined to confirm the reports to TheWrap, but CNBC’s David Faber reported the company is valued at $13 billion and is receiving advisement from finance heavyweights Goldman Sachs, Allen & Co., and Morgan Stanley.
The company recently boasted it had passed 50 million paid subscribers — a rapid jump from the 40 million it had last fall. In an effort to have more subscribers shift from a free to paid account, Spotify recently announced it had reached an agreement with Universal Music Group to exclusively restrict new albums to paying customers for two weeks. Future deals with Sony Music and Warner Music Group could follow this model as well.
Spotify’s move towards a direct listing, rather than an IPO, will have Wall Street watching closely. The decision allows the streaming service to bypass using investment banks to sell new shares to investors, and instead allows the company to offer its shares straight to the pubic. This cuts down on heavy fees incurred in the IPO process.
A direct listing holds a measure of added intrigue, though, as there is no “lock up” period barring early investors from selling their equity once Spotify is live on the NYSE. This could lead to more pronounced fluctuations in share price if employees decide to quickly exit their positions.
Overall the company lists more than 100 million subscribers, as of June 2016.
