Spotify sets its reference price at $132 a share

Spotify's direct listing comes against a backdrop of a major tech sell off last week, with Facebook losing nearly $100 billion in market cap. "It has an estimated 40% share of the global share of music streaming, giving it increasing bargaining power with labels and artists over the royalties it pays them".

But in the long-run, Spotify's performance in the stock market will largely depend on investor philosophies about the company and its business model.

All you stock market aficionados out there, listen up!

The market is still awaiting Spotify's highly anticipated public debut as the streaming music service goes through with its unusual "direct listing". "Such differences from an underwritten initial public offering could result in a volatile market price for our ordinary shares and uncertain trading volume and may adversely affect your ability to sell your ordinary shares".

"The attraction of the music-streaming service probably lies in Spotify's strong market share and rapidly growing revenues", Khalaf said. The shares will simply find their own price, depending on how many buyers and sellers there are, while it could take some time for a price even to be established. He's the founder and managing partner of Lead Edge Capital, a venture firm that has already invested hundreds of millions of dollars in Spotify at various prices over the past two years.

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Banks usually provide stabilization for IPOs, but not in Spotify's case. The company was valued at $19 billion past year, based on a private deal.

That's because most big investors in the Spotify sale are not subject to so-called lockup agreements.

Spotify is launching a direct initial public offering (IPO) in which it will sell stock under the ticker SPOT directly to investors instead, of going through an underwriter. Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment. In that time, Spotify has been able to gather 157 million customers and has managed to covert 72 million of that number into paying users of their premium service. The problem is, many are skeptical the company can ever make a profit. Smaller companies have listed without an IPO, but for a company of Spotify's size, this is unprecedented.

Spotify Chief Executive Daniel Ek wrote in a letter yesterday that the listing will put it on a "bigger stage", but that his focus remained on building the company for the long term.

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