Spotify is poised to press the play button on a stock market float that will test investors’ faith in its future prospects, amid mixed fortunes for fast-growing technology companies.
Analysts said the performance of the music streaming service’s shares on its first day of trading on Tuesday would gauge market opinion on whether it can stave off fierce competition for music fans’ wallets and eventually make a profit.
The Swedish company’s listing on the New York Stock Exchange will also offer greater insight into investors’ attitudes to technology companies, following a string of floats that have attracted great fanfare but met with varying receptions.
Wall Street offered a timely reminder of the volatility that can affect firms reliant on the promise of things to come, as electric car firm Tesla’s shares slumped nearly 7% in early trading on Monday.
Billionaire Elon Musk’s company suffered amid forecasts that deliveries of its Model 3 vehicle are falling short of its targets, as investigators look into a fatal crash involving one of its cars in the self-steering Autopilot mode.
Spotify, like fellow tech firms such as Tesla and Uber, is yet to make a profit, as its income struggles to keep pace with costs, including the royalties it pays to record labels and artists.
Analysts expect it to be valued at $20bn-$25bn, although the listing is also something of a plunge into the unknown for potential investors.
Unlike most companies that float, Spotify is not issuing any new stock, which means it has not set a price for its shares in advance.
Would-be investors cannot turn to Spotify’s past earnings for guidance because it has never reported any, racking up losses over the past three years.
The element of uncertainty could cause peaks and troughs in the price of Spotify shares, according to Laith Khalaf of stockbroker Hargreaves Lansdown.
“This approach will save…