Spotify’s Direct Listing – A Look Under the Hood

Spotify went public on April 3, following an unusual path known as “direct listing” – the shares started trading on the New York Stock Exchange, without any of the contractual or marketing arrangements that attend a typical IPO.

No traditional road show or bookbuilding, no allocations.  No one promising to sell, no underwriters promising to buy.  The company even declined to ring the opening bell.

It sounds simple, but like streaming music, it turns out to be tricky to implement.  For other issuers and shareholders considering this model, this note takes a closer look at the details from a securities lawyer’s point of view.