Spotify's direct listing is the only deal on the calendar for the upcoming week. The world's largest music streaming service is set to go public on Tuesday in what will be the first direct listing on the NYSE. The deal carries a high degree of uncertainty given that 91% of the 178 million shares outstanding will become freely tradable on the listing. The opening price will be set by broker-dealers based on buy and sell orders. That said, a successful listing could pave the way for other pre-IPO companies to choose this alternative route.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| Spotify (SPOT) Stockholm, Sweden |
$6,716M $21,463M |
$120.50 55,731,480 |
|
| World's largest music streaming subscription service. | |||
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Spotify (SPOT) boasts 71 million Premium subscribers (89% of 4Q17 revenue), which is 2x the paying users of closest peer Apple. Its 90 million ad-supported monthly active users provide a long runway for growth and targets 2018 revenue growth of 20% to 30%. Although the company remains unprofitable, it has achieved positive free cash flow, and has offset declining ARPU by decreasing churn and improving gross margin.
Potential IPO Launches
AT&T's Latin American DirecTV unit Vrio (VRIO) could launch its IPO roadshow on Monday, along with cloud-based subscription-management unicorn Zuora (ZUO) and Alzheimer's biotech Alzheon (ALZH). Steel manufacturing supplier GrafTech International (EAF) and large cancer biotech MorphoSys (MOR) can begin marketing later in the week.
| 5 Filings Could Launch in the Week Ahead | |||
|---|---|---|---|
| Issuer Business |
Est. Deal Size |
Sector | Lead Underwriter |
| Vrio (VRIO) | $1,500M | Consumer Disc. | Goldman Sachs |
| AT&T spin-off of its Latin American DirecTV satellite TV service. | |||
| Zuora (ZUO) | $100M | Technology | Goldman Sachs |
| Provides cloud-based subscription revenue billing and payment solutions. | |||
| Alzheon (ALZH) | $81M | Health Care | Citi |
| Late-stage biotech developing small molecule therapies for Alzheimer's disease. | |||
| GrafTech International (EAF) | $100M | Materials | J.P. Morgan |
| Vertically-integrated manufacturer of graphite electrodes used in steelmaking. | |||
| MorphoSys (MOR) | $150M | Health Care | Goldman Sachs |
| Licensing antibodies to pharmas and developing its own therapy for lymphoma. | |||
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 2.0% year-to-date and the S&P 500 is up 0.5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (SNAP) and US Foods (USFD). The Renaissance International IPO Index is up 4.1% year-to-date, while the ACWX is down 0.5%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.
