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Spotify's market value hovers at around $29 billion

Spotify's market value hovers at around $29 billion

Spotify's market value hovers at around $29 billion

Shortly before Spotify began trading on Tuesday, Amazon teased that it now has tens of millions of active subscribers for its music service, though it did not reveal an actual number. Spotify's stock initially had a reference price of $132, which was the basis for open bidding. According to Reuters, that price was about where Spotify stock was trading privately on Monday, and it would value the Swedish firm at over $23 billion. By comparison, internet radio station Pandora Media's market value stands at $1.2 billion almost seven years after that company went public. Competitors to Spotify include Pandora Media Inc., which is trading up 0.2% and has declined 0.4% so far in 2018.

The Dow Jones industrial average and the S&P 500 were down almost 3 percent on Monday, and the tech-heavy Nasdaq had erased its gains for the year.Stocks got slammed on Tuesday with tech stocks dragging in the market as Amazon (AMZN) dropped 5% and was again in the headlines following a tweet from President Donald Trump. The company was founded in 2006 by Martin Lorentzon and Daniel Ek, who remains its current CEO. Now the streaming music service is worth almost $30 billion.

The Recording Industry Association of America said that revenue grew a robust 16.5 percent in 2017, marking the first time since 1999 at the dawn of online music that the business has expanded for two years in a row. It has 159 million total users, including people who are willing to listen to ads for access to free music.

Over the past 12 years, Spotify has slowly but surely transformed from a niche service beloved by hardcore music lovers into a mainstream juggernaut with almost 160 million users. Because Spotify's costs-mostly the royalties it pays to record companies to stream their music-follow its growth, turning a profit is a tough proposition.

"But, Spotify is different".

The unusual IPO process had analysts effectively throwing up their hands about what to expect after Spotify went public.

Spotify previously raised about $2.7 billion in both debt and equity financing.

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Apple has 36 million subscribers, compared with Spotify's 71 million paid users.

And yet, Spotify joins the stock market when other tech stocks have been struggling.

Spotify's IPO has been unconventional by most industry standards. The initial reference price on released by the New York Stock Exchange late Monday evening was $132.

The direct listing also meant the company listed without underwriters, a set price, a set supply of shares, or a lock-up on existing investors.

Spotify chose the direct listing method in part to ensure that employees and longtime shareholders could sell stock on day one if they choose.

In fact, unlike other IPOs, the Spotify founder didn't even ring the opening bell at the New York Stock Exchange.

"While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company", Ek wrote in a blog post. As I mentioned during our Investor Day, our focus isn't on the initial splash. "Instead, we will be working on trying to build, plan, and imagine for the long term".

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