The IPO selected for the current analysis is Spotify, a music streaming site available on computers, tablets, and cell phone devices. Spotify’s financial statements showed that its revenues had been increasing, but it was still experiencing losses. The company generated €4.09 billion in revenues in 2017, € 2.952 billion in 2016, and €1.94 billion. The company’s revenues had grown by 39% between 2016 and 2017. However, the company experienced significant losses of €1.235 billion in 2017 caused by its debt (“Spotify Technology S.A. – Annual 10K Report”, 2018). Spotify went public to raise funds through equity and reduce the company’s debts. The company’s IPO took place on April 3, 2018, through a direct listing. The company had valued its stocks correctly at $132. Its stocks opened at $165.90 per share, 25% higher than the reference price. The company's market valuation upon going public was $29.5 billion, showing that the company’s shareholders made a good fortune (Bullock & Nicolaou, 2018). Spotify’s IPO was highly successful, and it generated significant value for its shareholders.
One market factor that contributed to the success of the IPO is that Spotify is a well-recognized brand. Companies with strong brand recognition can quickly sell their stocks and realize a profit for their shareholders. At the time of its listing, Spotify had grown its paying subscribers from 31% in 2015 to 44% in 2017, indicating that the company could have a stable future (“Spotify Technology S.A. – Annual 10K Report”, 2018). The global economic climate was also doing well, and investment in the technology industry was high. The IPO appealed to investors who compared it to the stocks of Netflix that had made losses for some years but had become one of the most successful stocks. I find that Spotify’s IPO was highly successful as it was one of the largest in the technology industry. The stock prices sold higher than the reference price showing that the company had valued its stocks well. The company was able to get a high valuation and realized a profit for its shareholders.
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References
Bullock, N., & Nicolaou, A. (2018). Four takeaways from Spotify’s market debut. The Financial Times. https://www.ft.com/content/2c9a4966-379a-11e8-8eee-e06bde01c544
Spotify Technology S.A. – Annual 10K Report. (2018). Securities Exchange and Commission. https://www.sec.gov/Archives/edgar/data/1639920/000119312518063434/d494294df1.htm
