Spotify planning New York listing during week of April 2: sources

[LOS ANGELES] Spotify Technology plans to list shares on the New York Stock Exchange the week of April 2, according to people with knowledge of the matter, giving the company weeks to prepare for an unconventional debut.

Spotify will deviate from decades of practice by not issuing any new shares or raising money in its initial public offering. Instead, existing stakeholders will offer their shares to investors, which is known as a direct listing. An active market for private stock sales over the past couple of years has helped the company establish a valuation higher than US$20 billion, based on some of the transactions.

Spotify will spend the next few weeks meeting investors to manage the uncertainty inherent in this approach, hoping to secure a smooth entry into the world's largest stock exchange. Banks typically help companies establish a price range where a stock will debut to ensure that its value doesn't plummet on day one.

A representative for the streaming service declined to comment.

Spotify will host an investor day March 15 to tout the prospects of a company that has helped transform the music business. Industry sales have grown three years in a row thanks to paid streaming services. Spotify is the undisputed leader of the market. It had 71 million subscribers as of the end of 2017, about double its closest competitor, Apple Music.

Yet it still has to prove offering music online is a good business. While company sales climbed to 4.09 billion euros (S$6.6 billion) in 2017, losses widened. Spotify pays out more than 70 per cent of revenue to the music business, and the cost of royalty payments to record labels and publishers has prevented one rival that got an earlier start, Pandora Media Inc, from turning a consistent profit.

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