Spotify’s Unusual IPO: A Blue Ocean On Wall Street?

Posted by: The Blue Ocean team

At a time when the recording industry was shrinking due to piracy, and Apple was promoting its downloadable MP3s, Spotify created a blue ocean with its streaming service that is used and enjoyed by millions of music lovers around the world.

Now, Spotify has challenged an entirely different industry by opting for a direct listing on its first day on the New York Stock Exchange, completely overriding the traditional IPO process.

Conventionally, when a company goes public, it hires investment bankers, also known as ‘underwriters’, that serve as a sort of intermediary between the company and investors, buying and selling shares during the initial offering to stabilize the share price. Instead, Spotify chose a direct list route and offer its shares to public investors, without the help of the banks.

Although highly unusual, Spotify’s innovative direct listing was a big hit among investors and was the eighth-largest tech listing ever. The company is now worth $26.5 billion, making it the biggest music company in the world.

Could other tech unicorns like Airbnb follow Spotify down this unconventional path? Has Spotify opened up new market space in the same way that crowdfunding did by offering an alternative to traditional banking? What do you think?

Has Spotify made a blue ocean shift on Wall Street?


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