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Sunday, June 26, 2022

Spotify Reportedly Holding Fake Earnings Calls in preparation for IPO

The title says it all – a Quartz source leaks that the Stockholm-based company is so close to an IPO that the management have started preparing for quarterly earnings calls by going through the motions in practice. Lots of hints have come out of Spotify that the company is preparing for an IPO, such as hiring an External Reporting Specialist in February, and gaining a recent $200 million line of credit from a group of bankers including Morgan Stanley, Goldman Sachs, and Deutsche Bank.

Daniel Ek and the Spotify upper management have likely faced plenty of tough board meetings after raising a total of $538 million since 2006. However earning calls can be a different beast- they’re public and requires some tact to answer investors without saying too much.

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In November of last year, Spotify raised $250 Million at a $4 billion valuation. Digital Music News, who the Quartz article references, says that Spotify may be pushing for a $10 billion valuation, given the success of Beats headphones which has its own streaming service, and was recently acquired by Apple for €3 Billion. Another interesting fact in that article is that “according to their multiple sources” the major record labels now carry a collective ownership share of roughly 20% in Spotify.

When preparing for an IPO, the SEC requires companies to go into a quiet period. Summers in scandinavia are the pinnacle of quiet periods, so we’ll take it as proof enough with this leadup in timing that Spotify will be listed sometime in early Autumn.

After Spotify will there be anything left in our IPO frenzy? Lately we’ve seen King, Zendesk, and JustEat go through their offerings. Will anyone else list shares while the climate seems right? Perhaps it’s time to start asking Rovio again how they feel about public offerings.

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