Spotify considers stock market listing without IPO

Spotify
Spotify are reportedly considering a direct listing without an IPO

Spotify is planning to go ahead with its public listing this year without the issuance of new shares, according to reports.

The online music streaming service is planning to proceed with an unconventional direct listing on the stock market, much to the disappointment of prospective Wall Street investors. It has been anticipated that the company will be valued at over $10 billion (£8 billion), having been last publicly valued back in 2015.

The process of direct listing is considered a rare occurrence on Wall Street, however it has been utilised by smaller businesses and can prove a beneficial alternative for current investors who do not wish to see their stake diluted once a company goes public.

The popular Swedish service has been in existence for almost a decade and is host to around 50 million subscribers globally. The service has felt the pressure of increased competition in the streaming world, with Apple Music and Tidal, founded by multi-millionare Rapper Jay-Z.

Despite this the company has continued to perform well, witnessing a growth in sales of 81 percent to €1.95 billion (£1.7 billion) back in 2015. However, this also coincided with considerable losses, which also grew to €173 million.

Streaming services have increasingly proliferated the internet and forced traditional media industries to adapt accordingly. Streaming revenues rose 65 percent to make up 37.6 percent of total music industry sales in the last year for the UK alone, with artists increasingly encouraged to release music in a digital only format.

Last week Spotify secured a multiyear licensing deal with Universal Music Group (UMG) – the world’s largest record label. Artists under the label include Coldplay, Adele, Katy Perry and The XX. According to the deal, premium paying customers will be able to listen to songs from UMG up to two weeks prior to official release.

Despite ongoing speculation over Spotify going public, the company has yet to issue a formal statement on the matter. Current Spotify investors include Wall Street Giant Goldman Sachs (NYSE:GS) and TPG (LON:TPG).