Spotify 's Unusual IPO Model Will Test The Company's Strength : NPR
Spotify
Spotify's Unusual IPO Model Will Test The Company's Strength
Spotify  the popular music streaming service  will officially take the company public this spring and is planning a very unconventional IPO — short for "initial public offering" — that has investors talking.
With  Spotify 's IPO  the narrative so far has been that this is yet another tech company innovating and "disrupting" investment banking. But that image is starting to erode.
Typically with IPOs  the company going public hires a big investment bank to both issue new shares and then go out and sell them. But  Spotify  plans to simply list  its  shares on the New York Stock Exchange and let them trade. That practice isn't done very often.
"To me  that is very analogous to a person that puts a sign out on the street and says 'this property is for sale by owner ' " Parker says. "Spotify  by doing this  is very confident that the public already understands Spotify's value  and that it does not need others to tell the story."
Some analysts estimate this could save the company as much as $300 million in fees. Spotify's current private investors can also simply cash out without waiting for the traditional lock-in period to end. From this perspective  a direct listing is just a more efficient way to IPO.
Smith says that in 2016  Spotify  got an unusual loan from a group of private investment firms  including Goldman Sachs. The investors demanded a number of conditions to the loan  "suggesting that the investors thought the company's private valuation was way too high " she explains.
 Spotify  boasts 140 million users  but most of them don't pay. They listen to the ad-supported stream. Ad revenue is only $300 million a year — a fraction of what the service truly costs.
So if  Spotify 's plans are successful   it  would be positioned to take advantage of that growth. But right now   Spotify  is still an unprofitable company  pushed towards an IPO by private equity firms eager to cash out. Smith thinks mom and pop investors aren't buying  it .
Spotify's IPO is scheduled for late March or early April. Many details remain to be worked out before that time.
"[TGT] 's Unusual IPO Model Will Test The Company's Strength
[TGT] will officially take the company public this spring and is planning a very unconventional IPO — short for "initial public offering" — that has investors talking.
With  [TGT] 's IPO  the narrative so far has been that this is yet another tech company innovating and "disrupting" investment banking. But that image is starting to erode.
Typically with IPOs  the company going public hires a big investment bank to both issue new shares and then go out and sell them. But  [TGT]plans to simply list  [TGT]  shares on the New York Stock Exchange and let them trade. That practice isn't done very often.
"To me  that is very analogous to a person that puts a sign out on the street and says 'this property is for sale by owner ' " Parker says. "[TGT]by doing this  is very confident that the public already understands [TGT]'s value  and that it does not need others to tell the story."
Some analysts estimate this could save the company as much as $300 million in fees. [TGT] can also simply cash out without waiting for the traditional lock-in period to end. From this perspective  a direct listing is just a more efficient way to IPO.
Smith says that in 2016  [TGT]got an unusual loan from a group of private investment firms  including Goldman Sachs. [TGT] demanded a number of conditions to the loan  "suggesting that [TGT] thought the company's private valuation was way too high " she explains.
 [TGT]boasts 140 million users  but most of them don't pay. They listen to the ad-supported stream. Ad revenue is only $300 million a year — a fraction of what the service truly costs.
So if  [TGT] 's plans are successful   it  would be positioned to take advantage of that growth. But right now   [TGT]is still an unprofitable company  pushed towards an IPO by private equity firms eager to cash out. Smith thinks mom and pop investors aren't buying  it .
[TGT]'s IPO is scheduled for late March or early April. Many details remain to be worked out before that time."