The streaming giant is set to go public sometime today.
All you stock market aficionados out there, listen up! You might be interested to know that Spotify, one of the largest music streaming services on planet Earth, is about to go public.
The music streaming giant will be making its Wall Street debut sometime today, and analysts are giving the company an initial estimated value of $25 billion.
That's quite a lot of money considering the company's circumstances. Spotify launched 12 years ago as a free service that relied on advertising to generate profit. Despite that, as well as the revenue generated from their premium subscriptions, Spotify has never actually made a profit. According to this report from The Fader, Spotify has actually made losses of over $1 billion over the last three years.
This is in addition to a bizarre model that Spotify will be using for their IPO. Traditionally, corporations issue new stock that will be sold to the public for a specific price when it appears on the stock market. Hoever, according to The Guardian, Spotify has instead opted to sell already existing shares currently being held by private investors. This will save them millions in fees, but the shares won't be purchasable at a set price, which will lead to a lot of volatility while investors settle on an appropriate price. That being said, experts are currently estimating a price of $132 per share.
Overall, this could lead to a tricky situation for investors, who will have to be willing to buy in at a volatile price for a company that has never reported a profit.