Spotify Files For IPO After Posting Massive Loss During 2017
Spotify might be the biggest music streaming service out there right now, but that doesn't mean that it is turning a profit. Spotify has filed with the SEC to allow it to begin selling shares publicly via an IPO. Spotify will be listed on the NYSE and will use the ticker name "SPOT." The filing has shed some insight into what the company might be worth.
According to the company, it has been selling shares on private markets for as much as $132.50 per share. That would indicate a value of over $23 billion based on the ordinary shares outstanding as of February 22 reports CNBC. We do know some specifics about Spotify already, with one key metric being subscribers. Spotify boasts 71 million paying subscribers and over 159 million active monthly listeners. The reason for the difference between paying subscribers and listeners is that Spotify still offers an ad-supported free version. Apple believes that its Apple Music service could beat Spotify's subscriber numbers by the end of the year.
The filing also sheds some light on financials at the streaming service. Spotify had revenue of $2.37 billion in 2015, $3.6 billion in 2016, and $4.99 billion in 2017 (based on conversions from euro to dollars) according to its F1. Spotify also noted that paid subscribers are growing at 46% year-over-year with monthly active users increasing at 29% year-over-year.
The filing documents do show that while Spotify is growing, it is far from profitable at the moment. The streaming giant posted a massive $1.5 billion loss in 2017. However, the lion's share of that loss was $1 billion from a non-recurring expense due to convertible notes from a transaction with Tencent in December 2017. The company posted an operating loss of $461.3 million in 2017 and $425.9 million during 2016.
"We set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry," the company said in its filing. "Spotify was founded on the belief that music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans."
Spotify didn’t give an exact time when it would begin selling public stock, it said shares would be available "as soon as practicable after this registration statement is declared effective."