Spotify Headlines IPOs with Direct Listing

​Over the past week the market encountered a few notable deals, including two of the largest tech companies: Spotify and Adyen planning to enter the public markets, as well as FMC's plan for a public offering of its lithium business in the fall.

• On Wednesday, February 28th, Spotify, the Swedish streaming music company stated its intention to go public. The company will start trading on the NYSE under the ticker SPOT. The firm has decided to go the direct listing route, an unconventional method. Under this process, Spotify will not issue new underwritten shares and will not look to raise additional equity like a traditional IPO. Direct listing allows current shareholders to sell their pre-existing shares to the public at an undetermined initial stock price. This IPO alternative could provide an example for fellow tech companies looking to enter the public markets. In the private markets, shares of Spotify have been trading over $132 per share, making the firm's overall value roughly $23 billion. Spotify's monthly active listeners, already at 159 million, are increasing at an annual rate of 29% and its paying subscribers are increasing 46%. Spotify's annual revenue grew 39% ($3.6B in 2016 to $4.99B in 2017), however, its most recent filing showed a $1.5 billion loss last year.

• Adyen BV, the Amsterdam-based payments services firm that is backed by many Silicon Valley investors, has announced that is currently working with banks such as J.P. Morgan Chase and Morgan Stanley for its coming IPO. Adyen gained some spotlight earlier this year when they signed a deal with eBay Inc. (NASDAQ: EBAY) to take over the transactions services previously handled by PayPal in 2023. Adyen's clients include Uber Technologies, Facebook, Netflix, and coincidently, Spotify.

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• Philadelphia-based chemical manufacturer FMC Corp. is planning a $500 million IPO for its lithium business in the fall. U.S.-based FMC Corp. is primarily a pesticide maker; however, it is planning to sell off roughly 15% of its lithium business via IPO in the third or fourth quarter of 2018. The IPO would give investors better access to the recent boom in the electric vehicle market.