Even though it has been around for years, Spotify is just now becoming a publicly traded company with a multi-billion dollar IPO.
Its shares opened at $165.90, up almost 26 percent from a reference price of $132 a share set by the NYSE late on Monday, but later pared gains to trade at $149.30, as some investors expressed concerns about the company's costs and the difficulty of competing against Apple. Unlike other companies who handle this process with the involvement of investment bankers, Spotify is not issuing any new stock. Spotify is the biggest company to ever go public via direct listing, and the first on the NYSE.
Apple tried to kill Spotify.
Where will the Spotify stock symbol open at?
Spotify laid out a number of reasons for listing its shares via a direct offering, including providing equal access to all buyers and sellers.
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The growth was nearly entirely attributable to the public's embrace of streaming, with subscriptions to paid platforms such as Spotify, Apple Music, Tidal and the new service of retail giant Amazon growing 56 percent to 35.3 million users.
The Associated Press reports that Spotify competitor Pandora is valued at $1.2 billion, and that the streaming service has been compared to having the growth potential of Netflix which is worth about $122 billion.
The initial public offering (IPO) of the world's largest music streaming company is one of the most hotly anticipated in years and comes as other similarly loss-making tech titans are also shopping for exchanges to host their share sales.
Ek said his company made a decision to skip the IPO phase because he wasn't interested in "the pomp and circumstance". However, as The Guardian points out, it's hard to value the music streaming firm because in its 12 years of existence, it's never turned a profit, despite the fact that it now has 157 million listeners, of which 71 million are paying subscribers. Instead, company insiders and investors will be selling their existing stock.
John Coffee, director of corporate governance at Columbia University told the CBC News that if the company had listed via an IPO, it would have to pay seven per cent of the proceeds to underwriters. Spotify has a unique case due to its stock structure. "While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company", CEO Ek said. Looking ahead, Spotify recently claimed that its paid subscriber base may grow to upwards of 96 million users by the end of 2018.
The NYSE had set a reference price of $132 for the stock, though the actual price will be determined by shareholders.