Sources: Spotify, valued at $13B, plans direct listing on the NYSE in Q4 2017 or Q1 2018; Morgan Stanley, Goldman Sachs, and Allen & Co. are advising
David Faber / CNBC :
Context & Ripple Effects
Spotify's listing path has moved quickly through 2017: an April report said it was weighing a direct listing instead of a traditional IPO, and this CNBC report confirms the plan — a $13B-valued direct NYSE listing targeted for Q4 2017 or Q1 2018, with Morgan Stanley, Goldman Sachs, and Allen & Co. advising rather than underwriting.
By December, the Wall Street Journal reported the SEC was expected to approve the direct share listing, with the decision due by mid-February — meaning regulators are on track to bless a structure that skips the conventional offering entirely.
First-order effects
- Morgan Stanley, Goldman Sachs, and Allen & Co. take advisory roles instead of the lucrative lead-underwriter positions of a traditional IPO, changing how they are paid and what they sell to Spotify.
- Existing Spotify shareholders gain a route to liquidity without a new-share offering or the customary lockup period of an underwritten IPO.
Second-order effects
- The NYSE secures one of the most-watched listings of the cycle by accommodating a non-standard structure, pressuring exchanges and banks alike to make room for more direct listings.
- A successful SEC-approved listing gives other large private companies a tested template for going public without bankers setting the price, weakening the traditional IPO's hold at the top end of the market.
Third-order effects
- If the SEC approval holds and the listing works as planned, the gatekeeping role of underwriters in major tech debuts starts to erode, shifting pricing power toward companies and their existing investors — though whether the structure suits anything other than widely known, heavily traded names remains genuinely uncertain.
The trend: High-profile private tech companies are beginning to bypass the underwritten IPO in favor of direct exchange listings, with regulators' willingness to approve the format setting the pace.