Tag Archives: New York Stock Exchange

On February 28th 2018, Spotify filed for direct listing on the New York Stock Exchange

Spotify is a music-streaming service that changed the music industry. The Swedish company was founded in April 2006, and on 7 October this year, the company has been on the market in ten years. It is developed by startup Spotify AB in Stockholm and now they want to sell shares to investors.

According to Spotify`s filing yesterday, the opening public price of its ordinary shares on the NYSE will be determined by buy and sell orders collected on the day of the listing. CEO Daniel Ek owns 9 percent of the company. Martin Lorentzon has 12 percent, but they will have full control over the company. Together they have 80 percent of the voting rights.

Spotify has so far been a bad business, but they changed the music industry with its new business model, and the industry`s revenue are growing for the first time since the CD was their «milk cow.» Spotify have 140 million users and 70 million are paying for their service.

Their revenue in 2015 was $2,18 billion. According to the filing, Spotify paid about 88 cents for every dollar in revenue in fees to record labels in 2015. It seems like it goes in the right direction for the company as those costs has declined to about 79 cents.

On top of that, Spotify has stopped burning cash and their free cash-flow margin is 2,7 percent. At the end of last year, the company had about 1,5 billion Euros in cash, cash equivalents and short-term investments.

Spotify as a company doesnt sell stocks in the non-IPO, but their stockholders will try to sell their shares to the public stockholders. According to Spotifys not-an-IPO filing, their value was as low as about $6 billion and as high as $23 billion in private stock transactions since the start of 2017.

You can ask yourself why they are doing it this way instead of raising money from a conventional IPO. Spotify`s existing shareholders can sell their shares to public stockholders, and it would be a win-win if record labels could buy a stake in the company. They will help each other.

Spotify operates under a freemium business model which means basic services are free, while additional features aer offered via paid subscriptions. Spotify makes its revenues by selling premium steaming subscriptions to users and advertising placements to third parties.

In 2013, the company launched a new website called «Spotify for Artists,» and they pay copyright holders royalties for streamed music. Spotify for Artists states that the company does not have a fixed per-play rate, instead considers factors such as the users home country and the individual artists royalty rate.

Rights holders received an average per-play payout between $.006 and $.0084. Spotify encourages people to pay for music, and their subscriptions are their main revenue source.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Twitter on NYSE

Many investors jumped on and grabbed shares at the Facebook IPO a year and half ago. They were so happy, but unfortunately, they all saw the share price dip by over 50%. It took more than 14 months to recover to its IPO level and now Facebook are a little bit above the IPO price. Now it is time for Twitter IPO.

Companies like that usually have a high growth in revenue, and the average revenue growth for Twitter is 170% per annum. To compare with Facebook, they had an average growth revenue of 87%.

The big difference is that the revenue for Facebook was $3,7 billion in its pre-IPO, and Twitter`s revenue was $316 million in 2012. That is ten times what Twitter currently generates. Facebook and Twitter are both in the social network business with similar revenue models.

Take a look at the chart below. This chart compare the two company`s ads-revenue growth. Twitter is much younger than Facebook but Twitter`s ad revenue is following similar trajectories.

The mobile ads from Twitter is a greater share of its overall revenue than Facebook. About 70% for Twitter and 49% for Facebook.

FB vs Twitter

I don`t think Twitter have hungry investors trying to enrich themselves during the IPO like we saw during the Facebook IPO. Twitter is on the way to lose about $100 million this year. This is good news for investors because you know they need money.

Twitter will use all the money from the IPO to build a stronger and more profitable business. The future looks bright for a stable and growing profit for Twitter. Facebook had almost a billion users when they went IPO. That was nearly at the peak, but Twitter with only 250 million users have plenty of room to develop their business for the future.

But keep in mind that Twitter can never be like Facebook anyway. This is two different things, used on two different ways with two different kind of customers/sort of people. Comparing them will be wrong in some ways. Facebook is for the mainstream, and Twitter is for the pro`s.

The younger generation would rather check Twitter for the latest news than reading the local newspapers. They use Facebook to look for entertainment, playing games and chat with friends. Twitter raised the IPO share price to a range of $23 to $25 per share yesterday. The offering size is 70 million shares. That is $2 billion if an overallotment option of 10,5 million shares is exercised.

Twitter IPO is more expensive than Facebook without profits. Facebook and LikedIn Corp trade at about 12 times forecast 2014 revenue, and Twitter will trade at about 12,5 to 13,6 times forecast 2014 revenue. The new price will value Twitter at up to $13,6 billion (revenue of $1 billion).

Twitter plans to close the books on the IPO on Tuesday at 12 p.m. EST (1700 GMT), a day earlier than scheduled. The IPO is set to price on Wednesday, and the shares will begin to trade on New York Stock Exchange on Thursday.

Buying stocks is fun, exciting and stimulating, filled with action. Other news today: ISM Non-Manufacturing PMI at 10:00am.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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