Published: Thu, April 05, 2018
Industry | By Johnnie Johnson

Spotify's Daniel Ek is now worth about $2.3 billion

Spotify's Daniel Ek is now worth about $2.3 billion

The Spotify banner hangs from the New York Stock Exchange (NYSE) on the morning that the music streaming service begins trading shares at the NYSE on April 3, 2018 in New York City. Sweden's flag is blue and yellow.

Spotify soared to a value of more than $26 billion in its long-awaited stock debut on Tuesday and achieved a valuation among the top United States tech listings. Spotify's costs - including artist and record label fees - are greater than its revenue, although this gap is apparently narrowing, The Guardian notes.

Spotify took an unusual route to going public through the direct listing.

That's in contrast with an IPO, in which the company and potentially a few existing shareholders offer a set number of shares at a valuation they think the market will bear.

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The Swedish-based music streaming service finished its first day at $US149 a share, valuing the company at $US26.5 billion.

Services such as Apple Music or Amazon Music Unlimited, even though trailing after Spotify in terms of numbers of subscribers, do not have to worry about staying commercially viable.

Spotify has had a solid debut on Wall Street in one of the most anticipated technology listings in recent times. But analysts still aren't sure the company should be worth much more than the $27 billion or so indicated by its current share price.

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The good vibes surrounding Spotify stem from its early lead in music streaming - a still-evolving field trying to hook people on the idea that it's better to subscribe for online access to millions of tunes than to buy individual albums and singles.

"[This] puts us on a bigger stage, it doesn't change who we are, what we are about, or how we operate", chief executive Daniel Ek said in a blog. Becoming a publicly traded company is a major move for a company that, unlike its streaming-based rivals such as Netflix, has never been particularly profitable.

At the end of a year ago, Spotify counted 159 million monthly users of which 71 million are premium subscribers.

He expected more companies to follow Spotify's strategy in the future, taking their time to list on the market. To date, the platform has 71 million premium subscribers.

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