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I don't see how this is a negative signaling issue. When you buy Apple Stock it's not from Apple. Spotify is going public largely due to terms they agreed to i

I don't see how this is a negative signaling issue. When you buy Apple Stock it's not from Apple. Spotify is going public largely due to terms they agreed to in previous funding rounds, but they are probably not raising money because they either don't need it or believe they can get better funding terms. If anything, this should be a signal that the company thinks the public stock is under-priced.

bogomipz 9y ago
>"When you buy Apple Stock it's not from Apple." How are these two comparable? When Apple IPO'd back in 1980 you were buying stock from Apple. >"...but they are probably not raising money because they either don't need it or believe they can get better funding terms." They lose hundreds of millions of dollars year over year, why would they not need it? Also why would they believe that they can get better funding now when they resorted to selling debt with unfavorable term intheir last round of financing?
- Eridrus 9y ago
  > They lose hundreds of millions of dollars year over year, why would they not need it? I have no comment on their actual business, just that I don't see them not selling shares as a negative signaling issue. People would make the same arguments regardless of whether they were selling stock or not.
- supster 9y ago
  An IPO provides 1) a fundraising opportunity 2) a liquidity event 3) an opportunity to fulfill contractual obligations One of the conditions of their recent debt financing was that they IPO within a certain time frame. If they believe that they don't need additional funding at the moment or can get better terms then they are simply fulfilling criteria #2 and #3 with their unique IPO. I imagine Spotify can get decent debt financing terms b/c they have such a steady and predictable source of revenue (though not necessarily profit).
  - JumpCrisscross 9y ago
    > One of the conditions of their recent debt financing was that they IPO within a certain time frame Spotify is not IPO’ing. They are direct listing their stock. Because of a simple drafting error on part of TPG et al Spotify is side-stepping the bulk of the delayed IPO penalties.
    - iav 9y ago
      This is exactly why they are direct listing. TPG is screaming bloody murder but then again they claim to be the masters of structuring complex deals so they can’t claim that a startup snuck in a loophole under them.
  - bogomipz 9y ago
    I'm aware of what an IPO provides. >" I imagine Spotify can get decent debt financing terms b/c they have such a steady and predictable source of revenue (though not necessarily profit)." Again if this true, why would they raise a billion dollars in convertible debt?
    - Eridrus 9y ago
      > Again if this true, why would they raise a billion dollars in convertible debt? Because debt is often a better instrument?

bogomipz 9y ago

>"When you buy Apple Stock it's not from Apple." How are these two comparable? When Apple IPO'd back in 1980 you were buying stock from Apple. >"...but they are probably not raising money because they either don't need it or believe they can get better funding terms." They lose hundreds of millions of dollars year over year, why would they not need it? Also why would they believe that they can get better funding now when they resorted to selling debt with unfavorable term intheir last round of financing?

Eridrus 9y ago
> They lose hundreds of millions of dollars year over year, why would they not need it? I have no comment on their actual business, just that I don't see them not selling shares as a negative signaling issue. People would make the same arguments regardless of whether they were selling stock or not.
supster 9y ago
An IPO provides 1) a fundraising opportunity 2) a liquidity event 3) an opportunity to fulfill contractual obligations One of the conditions of their recent debt financing was that they IPO within a certain time frame. If they believe that they don't need additional funding at the moment or can get better terms then they are simply fulfilling criteria #2 and #3 with their unique IPO. I imagine Spotify can get decent debt financing terms b/c they have such a steady and predictable source of revenue (though not necessarily profit).
- JumpCrisscross 9y ago
  > One of the conditions of their recent debt financing was that they IPO within a certain time frame Spotify is not IPO’ing. They are direct listing their stock. Because of a simple drafting error on part of TPG et al Spotify is side-stepping the bulk of the delayed IPO penalties.
  - iav 9y ago
    This is exactly why they are direct listing. TPG is screaming bloody murder but then again they claim to be the masters of structuring complex deals so they can’t claim that a startup snuck in a loophole under them.
- bogomipz 9y ago
  I'm aware of what an IPO provides. >" I imagine Spotify can get decent debt financing terms b/c they have such a steady and predictable source of revenue (though not necessarily profit)." Again if this true, why would they raise a billion dollars in convertible debt?
  - Eridrus 9y ago
    > Again if this true, why would they raise a billion dollars in convertible debt? Because debt is often a better instrument?