Poor pitch

28 February 2018 By Jennifer Saba, Robert Cyran Follow @jennifersaba

The streaming-music firm cued up a poor playlist of falling revenue growth and rising costs in its filing to go public. And refusing to call insiders’ extra voting rights a class of stock sounds like bad karaoke. Spotify’s performance doesn’t deserve a round of applause.

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Spotify on Feb. 28 filed a prospectus with the U.S. Securities and Exchange Commission for a direct listing of shares on the New York Stock Exchange. The music-streaming service said it had 71 million premium subscribers and about 159 million monthly average users as of the end of 2017. Under a direct listing there is no underwriter and the price of shares being sold is set by supply and demand.

Revenue in 2017 was 4.1 billion euros, a 39 percent increase from the previous year. Its operating loss worsened to 378 million euros from 349 million euros over the same period.

While the company has one class of stock, it has issued what it calls beneficiary certificates to founders Daniel Ek and Martin Lorentzon. These carry no economic interest but each certificate carries one vote. In the past, the company has issued 10 certificates for each share owned. It reserves the right to issue more certificates at a ratio of between one and 20 per share. The certificates may not be transferred and will be canceled if the underlying shares are sold or transferred.

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