When Spotify started publicly trading on the New York Stock Exchange earlier today, just before 1pm ET, its shares were valued at $165.90 – resulting in a market cap of approximately $30bn. ($29.6bn, to be more exact).
The bell has just rung on the NYSE to close the trading day (4pm ET), and that valuation has slipped 10.2%, down to $149.01 per share, equivalent to a market cap of $26.5bn.
This isn’t a great surprise: because of the unusual ‘direct listing’ approach that Spotify took to the stock exchange, some volatility in its pricing is to be expected over the next few days.
Yet after landing on the NYSE at a considerably higher price than the $132 per share that was broadly expected, Daniel Ek and co will surely be happy with their lot.
Sony is known to have owned a 5.7% stake in Spotify before trading today.
When the Spotify stock hit the public market, that stake would have been worth $1.68bn, but right now, with Spotify shares settling down, a 5.7% stake would be worth $1.51bn.
Sony’s holding didn’t appear amongst the 55.7m shares registered with the SEC for potential public trading today (of which Daniel Ek and Martin Lorentzon own a combined 67%).
Sony Music spokesperson
However, sources now tell us that Sony’s stake (or a part of it) could have been sold separately – if the major so wished – as it was amongst 106m Spotify shares which were eligible to trade under the SEC’s Rule 144a.
Rule 144a permits non-affiliates of a company, who have owned their shares for at least a year, to sell to qualified institutional investors.
Sony’s parent company in Japan, Sony Corp, will no doubt be keen for the company to realize its Spotify stake-holding at its highest point of value.
Between them, the three major music companies are believed to own a cumulative stake in Spotify covering 10-15% of the company.
That stake is currently worth somewhere in the region of $3.5bn.
A Sony Music spokesperson told MBW today: “Sony Music and The Orchard are committed to sharing with their artists and distributed labels any net gain they may realize from a sale of Sony Music’s equity stake in Spotify.
“This is consistent with our previously announced policy of sharing breakage and equity proceeds from digital catalog licenses with our artists and distributed labels.”
What’s particularly interesting about Sony’s stake in Spotify is that it is widely assumed to have been increased over and above stakes received by the company in licensing deals.
This explains why Sony was the only major music company to have a stake worth more than 5% of Spotify when the streaming firm filed its F1 prospectus with the SEC in February.
It points to the possibility that Sony has purchased additional shares in Spotify, almost acting as a VC, as the pre-listing private trade process has gone on.Music Business Worldwide