Spotify Discloses Plans to Offer and Raise IPO Worth $1.5 Billion

Music streaming service company Spotify has recently announced that it would offer an initial public offering of its shares. Spotify aims to raise as much as $1.5 billion from the initial public offering as it looks to expand its financial backing and overall cash reserves.

The company has been facing growing and stiffer competition in the past year. Other companies such as Apple and Amazon has been launching their own streaming apps that makes more accessible for the users of the devices supplied by the said companies.

An initial public offering of the company’s shares would not only increase Spotify’s financial reserve but also allow it them to meet growing investor demand for shares of the company. Spotify shares has been in demand prior to the initial announcement of its IPO.

Spotify currently has more than 70 million paying subscribers which is twice as much as Apple Music users. However, its total monthly users are currently at around 159 million. The company is still considered to be unprofitable due to its losses of $1.51 billion or 1.24 billion euros last year. However, Spotify’s revenue have gone up by 38% last year from the prior year to 4.09 billion euros or $4.99 billion.

The recent filing of the Swedish company with the Securities and Exchange Commission has revealed the financial records of the ten-year old company where it currently has 159 million monthly users with only at least half of the numbers paying. Spotify is currently available in 61 countries all over the world. The company is currently planning in expanding to other areas and countries following its share IPO. This is due to its recent losses being the current primary concern of investors. The company also acknowledged these losses and stated that they may not be able to generate enough revenue to offer investors profitability during the first couple stages of the IPO.

Spotify’s overall losses have also risen to 129% alone last year which was due to the company raising $1 billion in debt last 2016 in financing costs. Aside from pushing its financial resources higher in an initial public offering of its shares, Spotify also aims to work on boosting the number of its paying users. Losses of the company was also brought by expenses used on paying music companies, labels, publishers, and songwriters.

However, despite the low number of paying users, the company is currently considered as the top music streaming site in the world. Due to this, analysts have warned regarding the activity and buzz surrounding the upcoming IPO of the company due to the current weak outlook on its return.

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