Spotify's using a 'novel method' to go public, and it means the stock price could 'decline significantly and rapidly'

Spotify's direct public offering is set for Tuesday morning, and tech companies, traders and investors will be watching to see how the company's "novel method" for going public goes.

No set price range:

Spotify's planning on using private market transactions to guide shareholders towards an opening public stock price. Still, the range for private transactions between January 1 and February 22 was $90 to $132.50, a wide range. (

No set supply:

There also isn't a set supply of securities available. From the F-1 filing:

"There is not a fixed number of securities available for sale. Therefore, there can be no assurance that any Registered Shareholders or other existing shareholders will sell any or all of their ordinary shares and there may initially be a lack of supply of, or demand for, ordinary shares on the NYSE. Alternatively, we may have a large number of Registered Shareholders or other existing shareholders who choose to sell their ordinary shares in the near-term resulting in oversupply of our ordinary shares, which could adversely impact the public price of our ordinary shares once listed on the NYSE."

No lock-up:

And key existing shareholders aren't barred from selling shares with the exception of TME and Tencent, as they normally would be.

"None of our Registered Shareholders or other existing shareholders have entered into contractual lock-up agreements or other contractual restrictions on transfer, except for TME and Tencent. In an underwritten initial public offering, it is customary for an issuer’s officers, directors, and most of its other shareholders to enter into a 180 day contractual lock-up arrangement with the underwriters to help promote orderly trading immediately after listing. Consequently, any of our shareholders, including our directors and officers who own our ordinary shares and other significant shareholders, may sell any or all of their ordinary shares at any time (subject to any restrictions under applicable law), including immediately upon listing. If such sales were to occur in a significant quantum, it may result in an oversupply of our ordinary shares in the market, which could adversely impact the public price of our ordinary shares."

Spotify's using a 'novel method' to go public, and it means the stock price could 'decline significantly and rapidly'

No set price range:

No set supply:

No lock-up:

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