Spotify Technology (SPOT – proposed) hogged the headlines, but it was just one of seven new IPOs that popped through the SEC’s filing window last week with plans to raise about $3.3 billion. All this drama took place amid the turbulent U.S. stock market.
For the financial press, Spotify’s filing on Wednesday of its long awaited IPO of $1 billion amounted to the unicorn finally dropping the other shoe. (Well, that would be the case if unicorns did indulge in footwear.) The anticipation had been building since last year, when stories abounded about Spotify’s “confidential” filing for an IPO.
True to its word, Spotify will offer shares to investors through a direct public offering.
Bypassing the Street
The deal will bypass the Wall Street investment bankers and all the standard SEC rules for initial public offerings. It will be between Spotify’s existing shareholders and public shareholders. The company, Spotify, will not be involved in any transactions.
Here’s how it works.
Existing shareholders will offer their shares to the public at some price to be selected at a future date. These shares will trade on the New York Exchange under the proposed symbol “SPOT.” Aftermarket trading will be in the hands of the stock market gods.
Spotify By the Numbers
Here are a few passing notes on Spotify. Based in Stockholm, the company operates the largest global music streaming subscription service. Spotify has a presence in 61 countries and territories. Its platform included 159 million MAUs (monthly active users) and 71 million Premium Subscribers as of Dec. 31, 2017. The company believes its reach is nearly double that of its closest competitor, Apple Music, according to Spotify’s prospectus.
Spotify reported revenues of €4.1 billion (US$4.99 billion) in 2017, up 39 percent from €2.95 billion in 2016, and up 52.1 percent from €1.94 billion in 2015.
But the company has never been profitable. Spotify reported a net loss of €1.23 billion (US$1.522 billion) in 2017, up 128.2 percent from a net loss of €539 million in 2016, and up 134.3 percent from a net loss of €230 million in 2015.
Spotify reported an accumulated deficit of €2.43 billion (US$3 billion) as of Dec. 31, 2017.
The Netflix of China
But Spotify wasn’t the only new filing that caught Wall Street’s attention. The other was iQIYI (IQ – proposed). It filed a prospectus for a $1.5 billion IPO. (The company’s name is pronounced “eye-CHEE-yee,” according to an Aug. 17, 2017, story by Simon Erickson of The Motley Fool.)
iQIYI, based in Beijing and 69.6 percent owned by Baidu Holdings, is called “The Netflix of China.” The company offers a track record of producing blockbuster original content. In 2017, iQIYI’s original content accounted for five of the top 10 original internet variety shows and six of the top 10 original internet drama series in China, based on each title’s peak monthly active users, according to the iResearch Report. The company intends to devote more resources toward analyzing the content and entertainment consumption preferences of and trends favored by millennials and younger generations in China.
The word around Wall Street is that there are three names of interest in the IPO market. They are:
- Dropbox (DBX – proposed)
- iQIYI (IQ – proposed)
- Spotify Technology (SPOT – proposed)
Each one is a unicorn, a company with a market valuation of $1 billion or more.
AI and New Drugs
This week has just a single offering. It is BioXcel Therapeutics (BTAI – proposed).
BioXcel, based in Branford, Connecticut, is a biopharmaceutical company pioneering the application of artificial intelligence and big data analytics integrated with drug development expertise. The company uses its platforms to advance the next wave of medicines and significantly improve the clinical and regulatory success of drug development.
(For more information about these companies and others on the IPO calendar, please check the profiles found on IPOScoop.com’s website.)
Next Week
For the week of March 12, 2018, the calendar is clean and green, but anything can happen when the SEC’s filing window opens again for business on Monday morning.
Stay tuned.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.