NEW YORK • Spotify Technology's stock debut just made its founders two of Sweden's richest people.
Chief executive officer Daniel Ek, 35, is worth US$2.4 billion (S$3.2 billion), thanks to his 9 per cent economic stake in the music streaming service. Co-founder Martin Lorentzon, 49, gains a US$3.4 billion fortune from his 12 per cent holding, according to the Bloomberg Billionaires Index.
On its first day of trading on the New York Stock Exchange (NYSE) on Tuesday, the music streaming service finished with a valuation of US$26.5 billion. The share price closed at US$149.01, up 12.9 per cent from a reference price of US$132 set by the NYSE.
Its stock market debut marks the coming of age of the first European company to emerge as a global Internet player capable of fending off rivals among the United States Internet giants.
It also marks the revival of music as a stock market investment theme after a decade-long drought in which music companies were absorbed into media conglomerates.
Spotify was founded in 2006 as a peer-to-peer file sharing service by serial Swedish entrepreneurs Ek and Lorentzon.
Mr Ek's original idea morphed into offering a legal service that is "better than piracy and at the same time compensates the music industry", he told The Telegraph in 2010.
In 2008, the company publicly launched its Spotify service, offering listeners access to a vast library of recordings rather than making users pay for CDs or downloads of albums or tracks.
The music industry, then suffering from devastating consumer spending declines, resisted Spotify's promise of "unlimited access" to music in favour of the then current fashion of selling digital downloads based on the Apple iTunes model.
Since then, Spotify has overcome resistance from big record labels and some major music artists to transform how people listen to music and how the industry makes money. But it still does not make a profit and faces intense competition from Apple and others.
According to The Washington Post, analysts had anticipated volatility and perhaps irregularities during Spotify's market debut because the company chose an unusual path to go public, but "this was a smooth open", NYSE president Thomas Farley said during intra-day trading.
The streaming service giant, which trades under the symbol SPOT, bypassed many of the traditional steps of a Wall Street public offering. Company executives did not conduct a roadshow to convince big institutional investors, such as pension and mutual funds, to buy shares.
Spotify even skipped the usual NYSE ritual of ringing the opening bell. Epic Players, a theatre group, performed the honours.
What made Spotify's public debut most notable, however, was how it offered its stock. Rather than issuing new shares, Spotify conducted a direct listing, in which no money was raised but existing shares were sold by employees and investors.
In part because of the unorthodox public listing, the company's stock did not begin trading until hours after the opening bell, as potential sellers and buyers were matched up.