Spotify: IPO vs. Direct Listing: Is Spotify creating a new “music” trend in the stock market?

The case describes the path of Spotify Technology SA (Spotify) on its journey to become a public company. Spotify is a digital music service that gives access to millions of songs through digital music streaming services.
On April 4, 2018, Spotify went public through direct listing rather than the traditional initial public offer (IPO) route, an unconventional way to make its shares publicly tradable without raising new capital. This mainly eliminates the need for an investment bank to underwrite the initial offer along with other associated fees. Furthermore, valuations of the company were reaching $30b on its high-end range, which would make it one of the top 5 tech IPOs of all time. Finally, this event would also make Spotify the first major company to carry out a direct listing and could influence the way companies approach IPOs in the future.

Author: Paulo Soares de Pinho, Gabriel Giehl Martins
Reference Number: NSBE-16-20002
Number of pages: 21
Publisher: Nova School of Business and Economics
Teaching Notes: Yes
Price: € 3,50