SPOTIFY, DAY 2 (UPDATE)
The day after Spotify posted the fourth-largest opening trade since 2010 for a company going public, the streaming giant’s stock opened on day two around $139, rising to around $142.50 within the first 15 minutes of trading and then sinking down again; it closed the day at $145.87.
The high for the day was $148.93, with the low at $135.51. The stock's peak since opening day is $169.
About $940m in stock was sold on Tuesday, closing at $149.01 and giving Daniel Ek’s company a market value of $26.54 billion. It’s likely other companies, many of which have inquired about direct listings, will follow in their footsteps.
Sony announced that its Music unit sold 17.2% of its 5.71% holdings in the Spot on opening day, realizing an approximately $260m windfall.
The volatility of Spotify's stock price this week is naturally affected by the overall rollercoaster of the market, roiled by tempestuous Trump tweets, trade-war rumors and other signposts of our apocalyptic age. But the direct-listing approach taken by Team Ek is also said to be a factor, as sources in the financial sector say it removes controls on volatility. Investors are under no restriction period (as they would be in a traditional IPO) regarding when and how much stock they can unload, these sources say, so a great deal of opportunistic dumping is apparently moving the price wildly.
NYSE Group President Tom Farley told the Wall Street Journal, “Now that the dust is settled, I’m looking forward to going back to those companies and finding out where their heads are at.”
One element that pushed Spotify to the direct listing instead of an IPO that would have been financed by a bank is the cost saving. The Journal reported that Spotify paid advisers such as Morgan Stanley and Goldman Sachs $36 million in fees. Conversely, Snap paid nearly $100 million to its IPO underwriters.
The question now is whether the stock shows signs of volatility. In a traditional IPO, banks are on hand to prop up sales should they flag. There’s no safety net in place for Spotify.
