According to a report by CNBC’s David Faber, music streaming service Spotify is officially planning an initial public offering. The IPO is planned for either late 2017 or early 2018.
Sources say Spotify is currently valued at approximately $13 billion. It boasts 50 million subscribers, 3,000 employees, and a 43% annual revenue growth rate.
Faber reports Spotify will list on the New York Stock Exchange, rather than the tech-heavy NASDAQ exchange. Both exchanges have been in fierce competition over the last few years to land the latest tech IPOs.
Spotify reportedly seeks to do a direct listing, which is a little different than the usual process. Traditionally, blocks of shares are sold to underwriters, who then resell them to institutional and other large investors at a profit. Spotfiy will avoid that entire process, choosing instead to just list its shares on the exchange and let them trade freely. It’s a faster and cheaper way to IPO, but it comes without the assurance of getting a fixed price for shares.
Spotify’s 2016 numbers aren’t out yet, but 2015’s results weren’t exactly pretty. Revenue rose nearly 80% to hit US$2.1 billion. It paid $1.8 billion back to artists for the right to use their music. After paying other expenses, the company lost $206 million.
The company may be close to reversing those losses, however, with one board member telling reporters back in December the company could become profitable in 2017.
If Spotify does become publicly traded, it’s likely bad news for Pandora Media Inc (NYSE:P), the largest pure-play music streaming stock trading today.
