Spotify hopes to strike a chord with investors

Spotify — Tomorrow

Unlike other companies who handle this process with the involvement of investment bankers, Spotify is not issuing any new stock. Snapshares also got off to a rocky start a year ago.

In February, the shares were valued at around $20-billion based on private stock transactions among existing investors. For all this work, these intermediaries charge commissions of between 2% and 8% according to Investopedia, which cuts into the money raised by a company that's going public.

But Farrell says there's also room for upside.

PARIS, FRANCE - JANUARY 06: In this photo illustration, the logo of the Swedish music streaming service Spotify is displayed on the screen of an iPhone on January 06, 2017 in Paris, France. However, as The Guardian points out, it's hard to value the music streaming firm because in its 12 years of existence, it's never turned a profit, despite the fact that it now has 157 million listeners, of which 71 million are paying subscribers. If it does, then this could draw in more traders and the move could then snowball into something larger in due course of time. "Total global music sales have grown three straight years after a 15-year decline".

But Spotify has chose to take a more direct approach.

"Spotify wants to be the Netflix of music - its whole model is based on scale and therefore it needs to see strong subscriber growth".

And, to be sure, it faces potentially formidable competition. Smaller companies have listed without an IPO, but for a company of Spotify's size, this is unprecedented.

Even without all the bells and whistles, Spotify has used its public offering to take a victory lap of sorts. One important note, investors should know that Spotify has yet to turn a profit since launching on October 7th, 2008.

"The similarities here, we believe, are much greater than the differences", RBC Capital Markets analyst Mark Mahaney wrote in a recent research note assessing the parallels between Spotify and Netflix.

I have no doubt that there will be ups and downs as we continue to innovate and establish new capabilities.

Ek added: "Normally, companies don't pursue a direct listing".

"While this is obviously a big day and I'm really proud of my employees, I really just feel like we're in the early days, not celebrating the end days like so many other companies are doing", Ek said about the company's upcoming NYSE listing. "Our focus isn't on the initial splash", he said in a letter on the company website the day before.The so-called founder's letter has become a staple of tech IPOs, pioneered by the likes of Google, Facebook and Twitter.