Though founded in Sweden, Spotify has become a veritable force in the New York City tech scene. Its U.S. headquarters is located in 378,000-square-feet of 4 World Trade Center, where thousands of employees work on the massively popular platform each day. Now, Spotify is taking its next leap into the technology stratosphere: entering the stock market.
On Wednesday, rumors began swirling that Spotify would officially be going public. While not a surprising move for a company of its age and valuation (Spotify was founded in 2006 and boasts $2.7 billion in funding), the method in which the company will enter the stock exchange is considered unorthodox.
Rather than an initial public offering, Spotify will be pursuing a direct listing at some point in the first quarter of 2018, according to SEC documents filed in December. The direct listing means that no new Spotify stock will be issued, and therefore no money will be raised. Still, those with pre-existing stock (one of the company’s many investors or employees) will be able to freely trade their shares on the New York Stock Exchange.
The revelation of Spotify’s impending direct listing compounds an already busy week for the music streaming giant. Several days ago it was announced that Wixen, a California-based music publisher, was suing Spotify to the tune of $1.6 billion on the grounds that many songs on the platform are unlicensed. The company has been faced with similar lawsuits in the past, such as a $43 million suit that settled out of court in 2017.
Still, lawsuits such as those brought by Wixen could be a thing of the past due to a new piece of legislation. The Music Modernization Act, currently under discussion in the House of Representatives, would create a centralized database of all licensed music, thus preventing any discrepancies as to who has the rights to specific pieces of music. Such a database would not only benefit Spotify but other streaming services such as Apple Music, which has faced similar legal action in the past.
Though it is unclear when Spotify will officially appear on the New York Stock Exchange, it is anticipated they will release a prospectus in advance, which will make information about their current legal and financial status transparent.
At this time, Spotify has declined to comment on the developing deal.
