Could Spotify really be worth $23bn?

Daniel Ek co-founded Swedish streaming company Spotify in 2006

Spotify, the world's biggest music streaming service, has filed paperwork to start trading its shares publicly on the New York Stock Exchange.

The firm said it expects shares to sell at prices that could value the firm at more than $23bn (£16.7bn). The Swedish company will list shares directly on the NYSE, bypassing the traditional stock offering process.

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In a typical public offering, companies issue new shares, with the initial price underwritten by investment banks.

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With a direct listing, current Spotify shareholders will take their shares directly to the market. The move provides an exit for early investors looking to cash in on the company's growth, but is not intended to help the firm raise significant new money.

"It's about a company that is letting its investors get their returns so it can move on to the next stage of its career," said Mark Mulligan, a UK-based music industry analyst at MIDiA Research.

Spotify, which launched its streaming service in 2008, is now active in 61 countries, boasting 159 million monthly active users and 71 million paid subscribers.

Calculating value

The firm said its shares sold for between $37.50 and $125 each in private transactions last year and more than $132 this year. The company's potential valuation is based on a combination of stock price and how many shares it has outstanding.

The prices shared by Spotify suggest a range of $6.3bn to more than $23bn. The higher figure would make Spotify one of the biggest public debuts of a tech company since 2012, said Kathleen Smith, principal at Renaissance Capital, which provides institutional research and manages exchange traded funds focused on new public companies.

She cautioned, however, that private investors have tended to value firms more highly than public markets in recent years.

Snap, owner of Snapchat, for example also had an almost $30bn market capitalisation after its first day of trading last year, but it has struggled to sustain that figure.

"This could be an issue - could it possibly sustain those valuations?" she said.