Trade idea of the day: Spotify

Shares of the music streaming website Spotify could face significant volatility later today as they make their first appearance on the New York Stock Exchange, as the company has chosen an unorthodox way of listing.

Shares of the music streaming website Spotify could face significant volatility later today as they make their first appearance on the New York Stock Exchange, as the company has chosen an unorthodox way of listing.

Spotify has opted for a direct listing rather than a traditional public offering which means that instead of using investment banks to underwrite the offering current shareholders will be able to sell their share directly to the market.

The company’s chief executive Daniel Ek started preparing employees and interested investors for the potentially volatile day saying in a public letter that there could be “ups and downs” because of the unusual listing.

The much anticipated offering is the second listing from a big tech company in the US markets in two weeks following Dropbox's listing and is set to attract a lot of interest, not least because other tech stocks have been struggling recently.

The reaction so far has been fairly enthusiastic and during informal trading on Monday Spotify was already quoted at £132 a share. This would put the value of the company at around $23 billion, or up $3 billion from where it was trading informally between shareholders in February.


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