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Spotify – P1 – Intro

In the first major IPO of 2018, Spotify, the world’s leading music streaming service, will list its shares on the New York Stock Exchange in an unusual offering.

This comprehensive report will answer some key questions ahead of the company’s debut, such as why now and its aims, as well as reviewing the current state of the global IPO market and how you can trade the latest listings with Accendo Markets.

What is Spotify and why is it listing?

Spotify is the world’s largest subscription-based music streaming service with 70 million paying customers, second only in total users to Soundcloud.

The company was founded by Sweden’s Daniel Ek in 2006 as an answer to the burgeoning issue of music piracy, with the service being fully launched in 2008.

Since then, Spotify has grown to boast 160m active users of its platform, and private funding valuing the company at around $19bn, but could become even greater than that after its New York listing.

Spotify is choosing to list now to allow current shareholders a chance to sell shares more easily than before, as well as making it possible for ordinary investors to bet on its growth.

It also removes the fortune of the company from resting solely in the hands of big Wall Street investors, following management’s mantra of offering services to all and not just to a select few.

Why is Spotify’s IPO so interesting?

Unusually for a company making a public listing, Spotify is not offering any new shares to investors.

Instead, the shares that will be traded on the New York Stock Exchange will be ones previously owned by shareholders, in what is known as a direct listing. On the day of Spotify’s IPO, current shareholders will offer shares to ordinary investors without restriction.

Furthermore, the company has not hired investment bankers to underwrite the shares and guide towards an opening price with institutional investors, saving almost $75m. While not the first company to do so, at $22.6bn, it will certainly be the largest to attempt it.

And why is it so important?

Should Spotify’s unusual listing prove successful, it might encourage other tech ‘unicorns’ – 200 or so privately-owned companies that are worth more than $1 billion – to pursue similar public offerings.

Many have stated their aversion to trading publicly when private financing is available. Spotify is choosing to gamble with public trading to improve liquidity for current shareholders.

How does it compare with other 2018 IPOs?

Spotify will be the biggest company to IPO in 2018 so far, kicking off what is hoped will be the biggest year for public listings since 2014. Already, US markets have seen their strongest start to a year ever, with $8bn being raised in January 2018 alone.

While 2017 saw the greatest number of UK IPOs since the financial crisis, and the greatest amount of proceeds, can an accelerating 2018 IPO market lead to both of these figures being beaten this year?

For more details on upcoming 2018 IPOs, and the key numbers and dates for the Spotify IPO, keep reading.

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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