5 ms·

By far the most interesting part of this is that they are doing a direct listing. There is no IPO underwriter (the bankers that the HN audience loves to bash).

By far the most interesting part of this is that they are doing a direct listing. There is no IPO underwriter (the bankers that the HN audience loves to bash). The shares will just start trading, pricing should be fun to watch. Update: This nugget from the F-1 [1] alludes to the interesting to watch pricing > Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold ordinary shares to the public as there would be in an underwritten initial public offering. This lack of an initial public offering price could impact the range of buy and sell orders collected by the NYSE from various broker-dealers. Consequently, the public price of our ordinary shares may be more volatile than in an underwritten initial public offering and could, upon listing on the NYSE, decline significantly and rapidly. [1] https://www.sec.gov/Archives/edgar/data/1639920/000119312518063434/d494294df1.htm#rom494294_24 https://www.sec.gov/Archives/edgar/data/1639920/000119312518...

tw1010 9y ago
If you'd have to bet, do you think it's going to go significantly up or down within the first few days?
- jonknee 9y ago
  Well, that all depends on what the opening trade is!
- matte_black 9y ago
  WAY up.
- Analemma_ 9y ago
  I think taking either side of this bet would be foolish. You can usually (but not always!) bet on a Day 1 bump for a normal IPO, but there's no historical data for a direct listing of this size, and Spotify might overprice it just because, hey, why not, they get more money and without underwriters the strong incentive to underprice disappears. If you're not working for a huge bank, stay away from this until it stabilizes.
  - jonknee 9y ago
    > Spotify might overprice it just because, hey, why not, they get more money and without underwriters there are no clients to disappoint Spotify isn't pricing it, they aren't even selling shares. The initial pricing will come directly out of the order book whenever it lists. It's really unusual. Read the plan of distribution section: https://www.sec.gov/Archives/edgar/data/1639920/000119312518063434/d494294df1.htm#rom494294_24 https://www.sec.gov/Archives/edgar/data/1639920/000119312518...
    - Analemma_ 9y ago
      Presumably they'll still have an initial Ask price though? Unless I'm misunderstanding something.
      - BillinghamJ 9y ago
        I guess it depends on whether they're issuing new shares, or just allowing the trading of any existing shares already held by people.
      - jonknee 9y ago
        Spotify is not issuing new shares so they will not have any price to set. It's up to the "Registered Shareholders": > The Registered Shareholders may sell their ordinary shares covered hereby pursuant to brokerage transactions on the NYSE at prevailing market prices at any time after the ordinary shares are listed for trading thereon. Plus: > prior to the opening trade, there will not be a price at which underwriters initially sold ordinary shares to the public as there would be in an underwritten initial public offering As I said, this should be fun to watch!
      - prostoalex 9y ago
        Sounds like the company won't. Whoever places the first sell order on the exchange will get to determine the ask price.
        shkkmo 9y ago
- indescions_2018 9y ago
  At the risk of turning into r/wallstreetbets here. My bias is to the downside. Driven by a cacophany of pundits on CNBC post-IPO with negative outlooks. "There is absolutely no money to be made in streaming music on the internet" and "apple isn't into music for the profits" and so on ad infinitum. As well as significant short interest in the options market. $SNAP is probably as nearest neighbor as any for price-action historical context. Market timing (H1 2019) may also be ill-favored generally for anything tech related if we see significant correction. But I certainly hope I'm wrong. And will be looking to add positions in Spotify, Dropbox, Uber, Lyft, Docker, Snowflake, AirBnB, SpaceX, WeWork, Stripe etc if and when they become available ;)
  - all_usernames 9y ago
    Docker?
wweidendorf 9y ago
Per a WSJ article in January, Spotify has retained investment bankers (reportedly paying them $30MM) to help ascertain interest from large institutional investors, tell the investment story, et cetera. Given that, I imagine that they will advise the company and its pre-IPO shareholders on an indicative price or price range. Also, I would be hard pressed to imagine that they would not nominate a stabilization agent to help deal with the issues that you noted so that they manage price volatility in initial trading.
- jonknee 9y ago
  The F-1 tells the full story: > As this listing is taking place via a novel process that is not an underwritten initial public offering, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on the NYSE. Pursuant to NYSE Rules, we have engaged Morgan Stanley & Co. LLC (“Morgan Stanley”) as a financial advisor to be available to consult with the designated market maker (the “DMM”) in setting the opening public price of our ordinary shares on the NYSE. Morgan Stanley will be involved to help set the price with the market maker (sounds normal), but: > However, because Morgan Stanley will not have engaged in a book building process, they will not be able to provide input to the DMM that is based on or informed by that process. Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold ordinary shares to the public as there would be in an underwritten initial public offering. So they didn't get hired to do a road show and won't have interest from institutional investors. As for having a stabilization agent? It sure doesn't sound like it: > This lack of an initial public offering price could impact the range of buy and sell orders collected by the NYSE from various broker-dealers. Consequently, the public price of our ordinary shares may be more volatile than in an underwritten initial public offering and could, upon listing on the NYSE, decline significantly and rapidly.
  - wweidendorf 9y ago
    Interesting, thanks - I did not have a chance to read through the full F-1 yet when I wrote the below, so apologies for the incorrect statement on my part regarding the stabilization agent and roadshow given the limited scope of engagement that bankers have on this listing.
jartelt 9y ago
Matt Levine has written about the Spotify direct listing in a few of his Money Stuff columns. Overall he seems to think it will be a really interesting experiment given that no one is sure how it will play out. Another point he makes is that Spotify is still paying investment bankers a bunch of money despite the fact that it is not IPO-ing. Even when you try to avoid paying bankers a bunch of money by skipping the IPO, you end up paying bankers a bunch of money...
- rattray 9y ago
  Is this the link? https://www.bloomberg.com/view/articles/2018-02-21/your-ipo-can-t-fail-if-it-s-not-an-ipo https://www.bloomberg.com/view/articles/2018-02-21/your-ipo-...
  - jartelt 9y ago
    That is one. Here are a couple others: https://www.bloomberg.com/view/articles/2018-02-20/trading-is-a-good-way-to-set-a-price https://www.bloomberg.com/view/articles/2018-02-20/trading-i... https://www.bloomberg.com/view/articles/2018-01-04/spotify-s-non-ipo-really-is-novel https://www.bloomberg.com/view/articles/2018-01-04/spotify-s... https://www.bloomberg.com/view/articles/2018-01-16/spotify-will-pay-banks-to-cut-out-the-banks https://www.bloomberg.com/view/articles/2018-01-16/spotify-w...

tw1010 9y ago

If you'd have to bet, do you think it's going to go significantly up or down within the first few days?

jonknee 9y ago
Well, that all depends on what the opening trade is!
matte_black 9y ago
WAY up.
Analemma_ 9y ago
I think taking either side of this bet would be foolish. You can usually (but not always!) bet on a Day 1 bump for a normal IPO, but there's no historical data for a direct listing of this size, and Spotify might overprice it just because, hey, why not, they get more money and without underwriters the strong incentive to underprice disappears. If you're not working for a huge bank, stay away from this until it stabilizes.
- jonknee 9y ago
  > Spotify might overprice it just because, hey, why not, they get more money and without underwriters there are no clients to disappoint Spotify isn't pricing it, they aren't even selling shares. The initial pricing will come directly out of the order book whenever it lists. It's really unusual. Read the plan of distribution section: https://www.sec.gov/Archives/edgar/data/1639920/000119312518063434/d494294df1.htm#rom494294_24 https://www.sec.gov/Archives/edgar/data/1639920/000119312518...
  - Analemma_ 9y ago
    Presumably they'll still have an initial Ask price though? Unless I'm misunderstanding something.
    - BillinghamJ 9y ago
      I guess it depends on whether they're issuing new shares, or just allowing the trading of any existing shares already held by people.
    - jonknee 9y ago
      Spotify is not issuing new shares so they will not have any price to set. It's up to the "Registered Shareholders": > The Registered Shareholders may sell their ordinary shares covered hereby pursuant to brokerage transactions on the NYSE at prevailing market prices at any time after the ordinary shares are listed for trading thereon. Plus: > prior to the opening trade, there will not be a price at which underwriters initially sold ordinary shares to the public as there would be in an underwritten initial public offering As I said, this should be fun to watch!
    - prostoalex 9y ago
      Sounds like the company won't. Whoever places the first sell order on the exchange will get to determine the ask price.
      - shkkmo 9y ago
indescions_2018 9y ago
At the risk of turning into r/wallstreetbets here. My bias is to the downside. Driven by a cacophany of pundits on CNBC post-IPO with negative outlooks. "There is absolutely no money to be made in streaming music on the internet" and "apple isn't into music for the profits" and so on ad infinitum. As well as significant short interest in the options market. $SNAP is probably as nearest neighbor as any for price-action historical context. Market timing (H1 2019) may also be ill-favored generally for anything tech related if we see significant correction. But I certainly hope I'm wrong. And will be looking to add positions in Spotify, Dropbox, Uber, Lyft, Docker, Snowflake, AirBnB, SpaceX, WeWork, Stripe etc if and when they become available ;)
- all_usernames 9y ago
  Docker?

wweidendorf 9y ago

Per a WSJ article in January, Spotify has retained investment bankers (reportedly paying them $30MM) to help ascertain interest from large institutional investors, tell the investment story, et cetera. Given that, I imagine that they will advise the company and its pre-IPO shareholders on an indicative price or price range. Also, I would be hard pressed to imagine that they would not nominate a stabilization agent to help deal with the issues that you noted so that they manage price volatility in initial trading.

jonknee 9y ago
The F-1 tells the full story: > As this listing is taking place via a novel process that is not an underwritten initial public offering, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on the NYSE. Pursuant to NYSE Rules, we have engaged Morgan Stanley & Co. LLC (“Morgan Stanley”) as a financial advisor to be available to consult with the designated market maker (the “DMM”) in setting the opening public price of our ordinary shares on the NYSE. Morgan Stanley will be involved to help set the price with the market maker (sounds normal), but: > However, because Morgan Stanley will not have engaged in a book building process, they will not be able to provide input to the DMM that is based on or informed by that process. Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold ordinary shares to the public as there would be in an underwritten initial public offering. So they didn't get hired to do a road show and won't have interest from institutional investors. As for having a stabilization agent? It sure doesn't sound like it: > This lack of an initial public offering price could impact the range of buy and sell orders collected by the NYSE from various broker-dealers. Consequently, the public price of our ordinary shares may be more volatile than in an underwritten initial public offering and could, upon listing on the NYSE, decline significantly and rapidly.
- wweidendorf 9y ago
  Interesting, thanks - I did not have a chance to read through the full F-1 yet when I wrote the below, so apologies for the incorrect statement on my part regarding the stabilization agent and roadshow given the limited scope of engagement that bankers have on this listing.

jartelt 9y ago

Matt Levine has written about the Spotify direct listing in a few of his Money Stuff columns. Overall he seems to think it will be a really interesting experiment given that no one is sure how it will play out. Another point he makes is that Spotify is still paying investment bankers a bunch of money despite the fact that it is not IPO-ing. Even when you try to avoid paying bankers a bunch of money by skipping the IPO, you end up paying bankers a bunch of money...

rattray 9y ago
Is this the link? https://www.bloomberg.com/view/articles/2018-02-21/your-ipo-can-t-fail-if-it-s-not-an-ipo https://www.bloomberg.com/view/articles/2018-02-21/your-ipo-...
- jartelt 9y ago
  That is one. Here are a couple others: https://www.bloomberg.com/view/articles/2018-02-20/trading-is-a-good-way-to-set-a-price https://www.bloomberg.com/view/articles/2018-02-20/trading-i... https://www.bloomberg.com/view/articles/2018-01-04/spotify-s-non-ipo-really-is-novel https://www.bloomberg.com/view/articles/2018-01-04/spotify-s... https://www.bloomberg.com/view/articles/2018-01-16/spotify-will-pay-banks-to-cut-out-the-banks https://www.bloomberg.com/view/articles/2018-01-16/spotify-w...