Featured case: Spotify’s Direct-listing IPO

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The case

Who – the protagonist

Jennifer Wang, a portfolio manager with the hedge fund Super Tech.


Spotify is a major player in the music streaming industry and Apple Music’s main rival in the sector.


Spotify were planning an unusual direct listing on the New York Stock Exchange (NYSE), which involved simply making the company’s shares eligible for public trading on an exchange, but not raising any capital.

Wang was seriously contemplating whether to invest with Super Tech, and what maximum price and investment horizon they should accept. Plenty of analysis needed to be done to establish what was a fair value for Spotify’s stock.


Spotify was entering the NYSE on the morning of 3 April 2018, with its direct listing reference price set at $132.


Swedes Daniel Ek and Martin Lorentzon founded Spotify in Stockholm in 2006.

Key quote

“I think the traditional model for taking a company public isn’t a good fit for us.” – Daniel EK, Spotify CEO.

spotifyWhat next?

It was decision time for Wang, who was uncertain what to do.

Was Spotify’s direct listing simply a unique occurrence or could the IPO disrupt the traditional underwriting process, just as Spotify had disrupted the music industry?

Interested in finding out more?

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Spotify’s Direct-listing IPO
Ref 9B18N006
Teaching note

Ref 8B18N006

The authors

Craig Dunbar, Steve Forester and Ken Mark

Steve discusses the challenges of producing a case within five days of an IPO, how published sources was the best route to take and the popularity of Spotify amongst students.

Quick turnaround

Steve said: “It was challenging because the direct listing was a unique event and there was very little background information related to the valuation of companies like Spotify. With a case that focuses on valuation, there is often a lot of solid background information provided by analyst research reports, but of course those reports weren’t available to us right around the time of the IPO.

“We also needed dedicated case-writing support that could come together in a very short time. The advantage of such a quick turnaround was bringing into the classroom a very topical issue, in virtually real-time.”

Published sources

Steve continued: “It would have been virtually impossible to get such a quick turnaround by getting involvement and buy-in from senior management. First, they clearly had a lot on their plate at the time, and second, the typical company approval process can take weeks at best.”

Cause for debate Cause for debate

He added: “There has been lots of debate and discussion in the classroom when I have taught the case. Virtually everyone in the class has the Spotify app so everyone knows about the company and what it offers.

“An interesting classroom discussion is what to compare Spotify to, when trying to identify comparable firms for the relative valuation purposes.

“And getting students to think about what it’s like for one company to directly compete against most of the well-known giants – Amazon, Apple, and Alphabet – is an eye-opener.”

School support

“We would absolutely produce another case with a similar tight turnaround. We have a lot of internal support through Ivey Publishing, who were able to fast-track the usual editing process. It helps us to stay current and be at the forefront. And being able to have some fun and share my Spotify playlist just before the class made it all worthwhile.”

About the author

Craig Dunbar is an Associate Professor of Finance at Ivey Business School.

Steve Forester is a Professor of Finance at Ivey Business School.

Ken Mark is a case writer at Ivey Business School.


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