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MTP Podcast: Spotify’s Direct Public Offering

January 10, 2019

 

Chris Castle explains Spotify’s direct public offering (compared to a traditional IPO) and commentary on how the stock is performing (NOT investment advice).

According to the Spotify Case Study:

As of March 28, 2018, the average first-day return for 2018 IPOs was 13.2%. [4] On April 3, 2018, when Spotify opened for trading on the NYSE, the NYSE’s initial reference price that was published to the market pre-trading was US$132.00 per share the opening price of the shares was US$165.90 per share, or approximately 25.7% higher than the NYSE reference price. Trading in Spotify’s shares closed at a price of US$149.01 per share, which was approximately 10.2% below the opening price and 12.9% above the reference price….Spotify disclosed recent high and low sales prices per share in recent private transactions on the cover page of the preliminary prospectus and the final prospectus [to arrive at the reference price of $132].

Spotify Buyback

Spotify Case Study: Structuring and Executing a Direct Listing 

MusicTech Solutions: Why Will Spotify’s Price Tank?

Barrons: Spotify Stock Is Up This Year, but Analysts Say Don’t Get Too Excited

Spotify stock, up almost 6% this year, have dropped about 27% in the last 3 months, more than twice as far as theS&P 500’s decline.

On Monday, Stifel’s John Egbert reiterated a Buy rating on the stock, while lowering his target price to $170 from $210. That’s in part based on his estimate of the fair value of its stake inTencent Music Entertainment (TME). But he also trimmed some margin estimates based on the likely costs of global expansion.

“We remain bullish on Spotify’s subscriber growth prospects and believe the company could deliver upside to our 2019 subscriber addition forecast of 24 million, particularly if newly (and soon-to-be) launched markets become material,” Egbert wrote.

Deutsche Bank ’s Lloyd Walmsley maintained a Hold rating on the shares, cutting his price target to $135 from $152 in a Sunday note. Nomura Instinet’s Mark Kelley, meanwhile, wrote Sunday that Spotify was “among the most oversold stocks in our coverage.”

Spotify SEC Ruling on Reference Price for SPOT shares

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