Spotify Hits Wall Street With Success

Despite the controversy and tension with technology and Facebook in the past weeks, Spotify’s performance on Wall Street seemed to bring back some of its former glory and promise.

Spotify, the music streaming service, entered the stock market on Monday and concluded the day with a total of $26.5 billion. They wrapped the day with a share price of almost $150, a figure that matches the prices of bigger companies like M&T Bank and General Mills.

This success in the stock market marks the prevalence and extreme commercial accomplishment of Spotify, signaling the rise of popularity of music streaming. Record labels, tussling with the issues with copyrights, have received great income and revenue from forums like Spotify and Apple Music and experienced significant market share growth in the past years.

The most common way for companies to assert themselves in the stock market is to list its shares publicly in order to raise cash and revenue for further investments and expansion. Spotify, however, took a different approach and opted out from raising more funds. Instead, it chose the direct listing approach, preserving the stakes held by current shareholders.

Spotify has appeared quite confident regarding the funds it already held, as the Stockholm-based company claimed that it did not need additional cash from investors. Approximately at the end of 2017, the company held $1.84 billion of funds.

Its debut in the stock market, according to Spotify’s chief executive and co-founder, matched with its ongoing theme and public image as a disruptor. He said that “normally, companies ring bells. Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment. Normally, companies don’t pursue a direct listing.”

Spotify’s bold debut seemed risky but did receive public attention. The method of direct listing, though more profitable for current stakeholders, proved difficult for the company to include new shares to guarantee the liquidity of its stocks. Consequently, the Spotify stock did not start trading until past midday, which was the latest for any company listed on Wall Street so far.

Despite people’s anticipation for chaos and difficulty due to its method, the Spotify stock ended up safe and smooth. Spotify’s appearance on the stock market, along with the Wall Street debut of DropBox last month, signals, the growing market power and share of the technology sector.

DropBox, the cloud storage company, also had an impressive first day when their share price increased by 36 percent, from $21 per share to $31.59 at the end of the day on Tuesday.

The success so far experienced by DropBox and Spotify on the stock market bring back some glory and promise to the technology sector, which has been beaten down by recent controversy and tension with Facebook security crisis. In the past two weeks, the technology sector occupied approximately $450 billion in its market share, standing at the peak of Standard & Poor’s 500 tech sector, a quite remarkable figure to observe.

Featured Image via Wikimedia