I listen to Spotify every damn day. At the gym, on the Metro, at work, Spotify is constantly pleasing my ear drums. It is a easy to use platform that I have no problem spending $10 a month for. But TODAY Spotify is changing things in more than just the music department. Today they are going public. What this means is anyone with money to spend can now purchase shares of their stock on the New York Stock Exchange. You can review more about that in my Stock 101 post.
Normally when companies go public there is an IPO or an Initial Public Offering. This means the company going public will hire lots of fancy bankers who try and ensure their IPO is successful. These bankers make sure due diligence is done on the company, and then they go and pre-sell shares to investors. Therefore, by the time the IPO happens they generally know that people will actually buy shares of the company. These bankers also help to determine the price range for a share of stock. They value the company and help to determine how much they are worth. This is the tricky part because you want an attractive price range that investors will be interested in. Meanwhile, the Banks are earning a hefty fee for all of this.
So what the heck is Spotify doing?
They are just doing a Direct Listing. This means while they hired a couple of bankers they did not go through the usual IPO process to hire bankers that will help push their public offering to be successful. Spotify is leaving the stock price to the market place's decision. As people start buying stock the price will go up and down. People are not sure what to value Spotify at.