SPOT - Spotify Technology S.A.
143.20 -0.96 (-0.67%)
After hours: 7:08PM EDT
| Previous Close | 150.04 |
| Open | 149.29 |
| Bid | 143.20 x 900 |
| Ask | 143.50 x 900 |
| Day's Range | 143.50 - 150.26 |
| 52 Week Range | 103.29 - 198.99 |
| Volume | 1,982,412 |
| Avg. Volume | 1,541,090 |
| Market Cap | 26.045B |
| Beta (3Y Monthly) | N/A |
| PE Ratio (TTM) | N/A |
| EPS (TTM) | -7.63 |
| Earnings Date | Jul 24, 2019 - Jul 29, 2019 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | N/A |
| 1y Target Est | 168.73 |
- Yahoo Finance Video•5 days ago
Bitcoin futures climb above $10K on CME
Bitcoin futures are flirting with $10K, hitting a 15-month high, despite concerns over Facebook's push into the cryptocurrency space. Yahoo Finance's Zack Guzman and Melody Hahm are joined by Kathryn Tuggle, HerMoney Editor-in-Chief, to discuss.
- Yahoo Finance•5 hours ago
Streaming boom becomes 'holy grail' for resurgent music industry
Streaming services are driving growth in the music industry as questions persist about whether artists and songwriters are getting their fair share of the pie.
- Motley Fool•4 hours ago
Spotify's Podcast Strategy Takes Shape
You are what you listen to -- and advertisers want to know what that is.
Motley Fool•8 hours agoApple's Latest Defense Against Spotify Criticisms Again Misses the Point
Just 0.7% of Spotify subscribers bill through the App Store.
- Market Realist•12 hours ago
How Analysts View Spotify Stock
Out of 27 analysts covering Spotify (SPOT), 17 recommend a “buy,” seven recommend a “hold,” and three recommend a “sell.” Analysts have a 12-month median target estimate of $152.25, which means that the stock is trading at a discount of 1.5% from its current price.
- Market Realist•14 hours ago
Spotify Stock Recovers after Downgrade
Evercore analyst Kevin Rippey downgraded Spotify (SPOT) stock from “in-line” to “underperform” on June 24. Rippey claimed that it would be difficult for Spotify to improve gross margins in the coming quarters and the company would miss analyst earnings estimates.
- Financial Times•22 hours ago
Classical music has a metadata problem
Streaming has given a new lease of life to the recorded music industry. Take Vivendi's poptastic Universal Music Group. Its revenues from subscriptions and streaming grew 28.1 per cent year-on-year in the first quarter of 2019, netting the Bolloré-owned business €737m, just under half of its revenues.
- Investor's Business Daily•2 days ago
Spotify Stock Downgraded On Overly Optimistic Profit Targets
A Wall Street brokerage on Monday turned negative on streaming music leader Spotify, saying expectations for gross profit margin are "overly optimistic." Spotify stock wavered on the news.
- TheStreet.com•2 days ago
Spotify Shares Recover After Evercore Downgrade to Underperform
on Monday recovered after dropping a bit as Evercore downgraded the Stockholm music-streaming company to underperform from in-line. The stock's recent rally indicates that investors are overoptimistic about how gross margin will develop and about the outcome of negotiations with music labels, analyst Kevin Rippey in New York said in a June 24 report. Spotify on Monday closed 1.2% higher at $150.12 on the New York Stock Exchange.
- American City Business Journals•2 days ago
Apple poaches a former EA executive to lead marketing at Beats
Cupertino-based Apple Inc. is hiring a former Electronic Arts Inc. executive to lead marketing at Beats by Dre, the premium headphones company Apple purchased in 2014 for $3 billion.
- Benzinga•2 days ago
Evercore ISI Changes Channels On Spotify, Says Gross Profit Projections Overly Optimistic
Streaming music company Spotify Technology SA (NYSE: SPOT ) should be able to match the Street's user and revenue estimates, according to Evercore ISI, but three main concerns prompted the sell-side to ...
- Reuters•2 days ago
Apple says it collects fee on less than 1% of Spotify users
Premium customers pay a monthly fee or are in a free trial of Spotify's premium service, which is ad free. Spotify has a total of 217 million customers including users of its free service. Apple competes directly with Spotify with its Apple Music service.
- Barrons.com•2 days ago
Spotify Stock Could Fall as Competition Heats Up, Analyst Says
Evercore says investors are overestimating Spotify’s ability to make money from podcasts and offering services to musicians and are underestimating the competition from other streaming services.
- MarketWatch•2 days ago
Spotify stock falls after Evercore turns bearish
Spotify Technology SA shares are down 3.7% in premarket trading Monday after Evercore ISI analyst Kevin Rippey downgraded the stock to underperform from in-line. "We simply do not see a path by which Spotify can generate the level of gross profit demanded by Street estimates over the medium-term," he wrote. "Consumers enjoy streaming music, and there's little content differentiation between platforms. Therefore, labels' willingness to cede economics to Spotify in a manner that would satisfy estimates is very limited in our view." Rippey also argued that Spotify might see smaller-than-expected upside from newer initiatives like paid promotions and podcasts. He lowered his price target on the shares to $110 from $125. Spotify's stock has gained 31% so far this year, as the S&P 500 has risen 18%.
- Bloomberg•2 days ago
Early Spotify Investor Raises $300 Million for Young Startups
(Bloomberg) -- Creandum, an early investor in Spotify Technology SA and iZettle AB, has raised a 265 million euro ($300 million) fund, in a bid to find and back Europe’s next tech superstars.With offices in Stockholm, Berlin and San Francisco, the venture capital fund returned more than $800 million to investors last year after exits from previous investments, such as Spotify, which went public on the New York Stock Exchange, and Small Giant Games, which was acquired by Zynga Inc.With it’s fifth and latest fund, Creandum will continue to target early-stage investments in so-called seed and A rounds in areas including food, health tech, mobility, fintech as well as logistics, manufacturing software and energy."We try to continue to stay small, despite a chance to raise more money," Johan Brenner, the general partner at Creandum, said in an interview, adding the fund’s backers are comprised of 26 investors, including pension funds, endowments and family offices in Europe, the U.S. and Asia.Creandum turned away some investors to keep the fund small, Brenner says, adding that it would help "to focus on the early stage, where we think the best investments can be made and the best returns can be made for our investors."While a larger fund would allow the firm to make many more small investments, Creandum wouldn’t have the time to support the investments and the management, resulting in lower returns, Brenner said. Creandum said it has already made some investments through the new fund that are yet to be announced.Creandum’s fund size compares to peers that have raised much larger pools of capital. Accel, an early investor in Slack Technologies Inc., in May announced it has raised a $575 million fund aimed at nascent companies in Europe and Israel. While European insurer Allianz SE unveiled in February it was increasing the size of its tech investment fund to 1 billion euros.The Creandum II fund, which started in 2007, has returned about 1,000 percent. The fund in May 2018 sold its stake in iZettle to PayPal Holdings Inc. It was also one of the first institutional investors in Spotify in 2008.(Added context on Creandum II fund.)To contact the reporter on this story: Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.netTo contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- The Basis Point•3 days ago
10 Things I Learned Listening To Rap Caviar On Spotify This Spring 2019
Lyrical analysis, jokes, and the best songs of Spring.
- Engadget•5 days ago
Spotify claims it 'overpaid' songwriters and wants its money back
Spotify and music publishers have been in a bit of a tiff for months over aplanned royalty rate increase that would require streaming services to paymore to artists
- Bloomberg•5 days ago
With Slack Sitting Pretty, Its Bankers Eye More Direct Listings
(Bloomberg) -- Slack Technologies Inc.’s trading debut was everything Wall Street wanted it to be: nothing flashy.The company’s advisers anticipate that more firms will adopt the so-called direct-listing model for going public, and give the banks an edge over rivals who have little to no experience in pulling off a listing like Slack’s.There could be five direct listings next year -- or more, depending on how the overall market for public offerings shapes up, said Colin Stewart, global head of technology capital markets at Morgan Stanley. His firm, along with Goldman Sachs Group Inc. and Allen & Co., are the only three companies to have had lead roles on high-profile Silicon Valley direct listings.“This will be something that companies need to consider as part of a toolkit to access the public markets,” Stewart said. “It’s clear that the model is attractive. The question will be on applicability -- how many companies will use it.”While a direct listing tends to pay banks less than a typical initial public offering, the fees are shared among fewer firms -- meaning Goldman, Morgan Stanley and Allen & Co. gain significantly by being leaders in the market. In the case of Slack, that meant at least 90% of the $22 million in fees split among the three banks, people familiar with the matter have said. The banks’ biggest rivals have yet to work on a deal of Slack’s magnitude. And the two mega-banks handled the lion’s share of the trading volumes, according to three people with knowledge of the matter, who asked not to be identified discussing private flows.‘New Model’“It has been very exciting to pioneer this new model alongside our clients, and we expect other clients to increasingly utilize this path when it best achieves their objectives,” William Connolly, co-head of the West Coast financing group and head of technology equity capital markets at Goldman, said in an email.That doesn’t portend a complete overhaul to the model for going public -- there are hundreds of traditional IPOs a year -- but Stewart’s prediction would mean more than double the number of direct listings from the past year. Unlike in an IPO, a company opting for a direct listing isn’t raising money with a sale of new stock. Instead, shares already held by founders and other early investors are simply listed for trading, making those shares easier to sell.Goldman and Morgan Stanley have been in talks with more than a dozen firms considering the direct-listing option, people familiar with the matter have said. They include Airbnb Inc., one of the hottest IPO candidates in the next year. Adding to the encouragement is that Slack’s listing went smoother that Spotify Technology SA’s last year, with the work-collaboration company’s shares staying close to its opening price in the first two days of trading -- an execution win for market makers. A Slack investor who made a recent purchase when the shares were private is up about 43%.IPO OpeningsThat’s roughly the same as standard public offerings, with this year’s technology and communications IPOs opening almost 50% above their offering prices on average, according to data compiled by Bloomberg.Bloomberg Beta, the venture capital arm of Bloomberg News parent Bloomberg LP, is an investor in Slack.While Morgan Stanley, Goldman and Allen & Co. have been most prominent in leading direct listings, other Wall Street giants have been involved in the space. JPMorgan Chase & Co., for example, has led direct listings for companies including Colony Real Estate Credit Inc., which started trading last year.Citadel Securities was picked as the designated market maker for Slack’s trading debut, and its role, along with Morgan Stanley’s as adviser to the market maker, a role the bank created ahead of Spotify’s listing, was applauded by venture capitalist Bill Gurley in a Twitter post Thursday.“Other banks want to position direct listings as ‘exceptional’ or ‘rare.’ MS believes they are 1) a better mousetrap, and 2) can be used broadly,” he wrote.John O’Farrell, a partner at Andreesen Horowitz, one of Slack’s largest early investors, was on the floor of the New York Stock Exchange for the listing Thursday, and stuck around after the crowd faded to shake hands with the market makers. His firm may have reaped $2.6 billion, according to CB Insights. Venture capital firm Accel, which held 24% of Slack as of the stock’s debut, now has a $4.6 billion stake, the research company said.Yet investors may not all cheer the model.Gurley argues that personal relationships, ties to banks and an investor’s brand determine whether it can participate in an IPO, as opposed to the algorithms used in direct listings. In the Slack and Spotify direct listings, large shareholders weren’t promised allocations beforehand. Instead, the highest bidders end up getting the biggest exposure on the first day of trading.“The hand-allocated IPO is archaic and it’s time for it to be a thing of the past,” Gurley said in a phone interview. “In a day and age of a globally connected Internet, it’s very easy for a company to be discovered and for investors to be educated about that company without visiting people one on one.”But that also means investors may have to buy in at a higher price and therefore miss out on the initial IPO pop that many in the market have gotten used to. That could be a tough reality for large investors like Fidelity Investments that are often big buyers in an IPO, and increasingly buying more stock in private markets.Smooth DebutStill, the fact that Slack’s debut went so smoothly may spur different types of companies to choose a listing method that the company described in its regulatory filings as “novel,” said Joe Mecane, head of execution services at Citadel Securities.Slack didn’t have many of the characteristics Wall Street tends to expect for a direct listing, Mecane said. Such companies typically have a well-known brand and a large base of existing shareholders to ensure stock liquidity -- and don’t have an immediate need to raise funds.Unlike Spotify, Slack is seen by many as a business-to-business company and had a more concentrated investor base than that of the music-streaming service. Also, Slack burns a significant amount of cash.\--With assistance from Drew Singer.To contact the reporters on this story: Sonali Basak in New York at sbasak7@bloomberg.net;Eric Newcomer in San Francisco at enewcomer@bloomberg.netTo contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Liana BakerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Investopedia•5 days ago
4 Stocks Seen Leading As Streaming Music Market Triples
The streaming revolution has unleashed a wave of disruption across the global music industry. The big winners may include Vivendi, with a market value of $31 billion, Sony Corp. (SNE), at $64 billion, Spotify, at $29 billion, and Tencent Holdings, at $24 billion, as music listeners switch from free to paid services, Goldman says in a story by Business Insider outlined in the story below. Goldman now expects the recorded music space to grow more than previous forecasts, roughly two and a half times from the current size at $19 billion.
- InvestorPlace•5 days ago
IPO Success Makes Slack Stock A Gamble, Not An Investment
Shares of Slack Technologies (NYSE:WORK) surged upward following its Thursday IPO. In one of the more successful IPOs of 2019, the corporate messaging company surpassed its IPO price by a wide margin as the Slack stock price surged as high as $42 per share before falling to $38.62 per share in the last hours of trading.Source: Shutterstock Still, despite this massive upward spike, the company must cope with financial losses and much larger competitors that could derail the IPO's initial success. Given the obstacles faced by Slack stock, investors should look at WORK stock as a speculative bet rather than as an investment. Slack Stock Spiked on Its IPO DaySlack stock shot upward by more than 48.5% in Thursday trading. Investors quickly bid prices higher on the San Francisco-based corporate messaging company, which set its IPO price at $26 per share. By the end of Thursday trading, the market cap rose to $19.47 billion.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe company also took a unique route to get Slack stock listed. Slack offered its stock to the public in a direct listing, selling shares directly to investors rather than using a pricier investment bank. Spotify (NYSE:SPOT) also listed their shares this way and enjoyed some initial success. * 10 Monthly Dividend Stocks to Buy to Pay the Bills Slack Holds Potential for High-Risk GainsWith the massive rise in WORK stock on the first day, the direct selling strategy did not hurt them. Given the initial move higher, I see some potential for short-term stock gains. It could follow in the footsteps of Beyond Meat (NASDAQ:BYND), a recent IPO that rose more than eightfold from its IPO price at its peak. As such, investors could profit handsomely from a speculative bet on WORK stock.However, our own Will Ashworth seemed underwhelmed with both the direct listing strategy and Slack stock itself. Although the first-day performance likely surpassed his predictions, he may have a point as the stock carries a great deal of risk. For one, the spike higher from the first day of trading took the price to about 43 times sales. That does not match the levels of BYND stock or many of the cannabis equities. However, that comes in almost 20 times higher than the S&P 500 average of 2.2.In fairness, a company with a compound annual growth rate of 95% will likely not come cheap. However, continued losses for the foreseeable future make this a riskier play. Watch for CompetitionThe significant competition Slack faces also adds to this risk. Most of Slack's peers are smaller outfits with less name recognition. Unfortunately for holders of Slack stock, these competitors also include some of the largest and wealthiest companies in tech.Microsoft (NASDAQ:MSFT) introduced Microsoft Teams last year. About 200,000 organizations use this tool. Moreover, the dominant player in personal chat, Facebook (NASDAQ:FB), has operated Facebook Workplace since 2016.Currently, Slack holds an edge with more than 500,000 making use of its tools. However, Microsoft and Facebook earn profits and hold billions in cash. If either of them chooses to compete aggressively, it could have devastating consequences for Slack stock. * 7 Stocks Flashing Signs of Strong Insider Buying The Bottom Line on Work StockAlthough the performance of WORK on the first day could add to the speculation, internal and external threats could undermine this company in the future. The massive spike in Slack stock bodes well for the future of the equity. Unfortunately, it could also suffer later if traders begin to seriously ponder the company's future.Even with massive revenue growth and market leadership, losses could eventually undermine Slack stock. Even more unsettling, both Microsoft and Facebook also compete in this business. Each of these tech giants holds enough cash to compete more aggressively for Slack's customers if they so choose.If one wants to buy Slack stock, the initial move higher could justify a speculative bet. However, one should buy this stock with the gambling money they were going to take to Vegas, not one's retirement funds.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post IPO Success Makes Slack Stock A Gamble, Not An Investment appeared first on InvestorPlace.
- Zacks•5 days ago
The Zacks Analyst Blog Highlights: Netflix, Spotify, Microsoft, Cisco and Facebook
The Zacks Analyst Blog Highlights: Netflix, Spotify, Microsoft, Cisco and Facebook
- Bloomberg•5 days ago
Advertisers Face Up to Scandal Risk But Can't Ditch Tech Giants
(Bloomberg) -- The advertising industry’s annual gathering on the French Riviera has become a recurring cycle of contrition from technology giants and admonishment from the Mad Men. In 2017, it was YouTube apologizing for ads appearing next to jihadist terror videos. In 2018 came Facebook Inc.’s mea culpa for a data privacy scandal. This year, Facebook regretted live-streaming a mass shooting in New Zealand and YouTube battles the spread of hate speech.All the while, the marketing money continues to flow. Facebook and Google’s advertising sales grew 38% and 22%, respectively, in 2018, and both dominated the beach front in Cannes again this year with showy largess. Google served up grape smoothies, gingerbread ice cream and live tunes from synth-pop duo Pet Shop Boys and electro outfit Justice. Facebook held panels with Grammy-winning singer-songwriter John Legend and style icon Jenna Lyons, while Chief Operating Officer Sheryl Sandberg hosted some of the biggest advertisers by the shore.But the recurring scandals hitting the tech giants have created a dilemma for chief marketing officers. Do they take a principled stand and move their ad dollars elsewhere, sticking to more traditional media like TV and newspapers but missing out on the global reach and hyper-specific targeting of consumers that the platforms afford? Or do they accept the risk of being drawn into future hate speech and toxic content controversies, if it means they can keep growing sales? The consensus in Cannes this year from advertisers: let’s ride it out.“Every once in a while there’s going to be a screw-up and unfortunately the screw-ups are pretty big,’’ said Michael Roth, chairman and chief executive officer of the Interpublic Group of Cos., the world’s fourth-largest advertising company by revenue. “The thing is, it still works.”Unlike the past, when adverts were confined to spaces curated by professionals, such as TV commercial breaks, radio programs or billboards, chief marketing officers are opting to get comfortable with the daily risks of placing their products alongside non-vetted, user-generated content.In Cannes, Facebook and Google both stressed their latest efforts to keep their platforms safe, from investing in machine learning that spots offending material before it’s uploaded to hiring more humans to oversee posts. But each conceded they’ll never keep all the objectionable material at bay. Sandberg said Facebook had a ‘Herculean’ task on its hands and that generally, all technologies can be used for both bad and good.“Bad actors are smart and find ways to circumvent our policies and brush right against where the new line has been drawn,’’ said Cecile Frot-Coutaz, YouTube’s head of Europe, Middle East and Africa. “It’s that delicate balance of keeping the openness but protecting our users and advertisers.”YouTube’s latest controversy is how it keeps its service safe for children, after predators were found to be leaving pedophile comments on videos featuring kids. YouTube has previously come under fire for allowing fake or misleading content to flourish on its platform, and not removing videos with homophobic and racist remarks.Pressure isn’t just building from marketers, but also from other platforms touting their wares in Cannes to lure spending. Amazon.com Inc. hosted meetings in a top-floor suite at the five-star Carlton hotel with spectacular views over the Mediterranean, showing brands how they can advertise in Amazon search results and grow sales through its Alexa smart speaker. Snap Inc. entertained guests in a contemporary art museum, handing out rainbow-colored flip-flops. Music streamer Spotify Technology SA and Walt Disney Co.’s Hulu brought in Grammy-nominee Ciara for a VIP party at a hillside villa.Advertisers’ latest initiative to tackle the issue of safety online is a so-called ‘Global Alliance for Responsible Media’ that includes brands, ad agencies and platforms. Yet pushed at the partnership’s launch on specific measures they’d like to see, marketers from consumer-goods giant Unilever, confectionery manufacturer Mars Inc. and drinks-maker Diageo Plc weren’t forthcoming.Yannick Bollore, CEO of ad giant Havas, called it “unthinkable” not to advertise on social platforms, because that’s where consumers spend most of their time.“But we need to guarantee to our clients that we can find a positive environment,” he said in an interview in Cannes.His counterpart at WPP, Mark Read, went furthest in publicly suggesting changes that might be needed, mooting moderation of content in certain categories or limiting what can be posted from new accounts.“We need to think about the design of the platforms,” Read said, whose London-based advertising group spends billions of dollars of client money with Facebook and Google. “Clearly they haven’t done enough.”Marketers are making investment decisions at a time when the average tenure of a chief marketing officer, or CMO, is a mere 43 months, or less than half of that of a CEO, according to research by headhunters Spencer Stuart. Their short shelf-life shows the scrutiny they’re under from their boards, said Michael Kassan, founder of MediaLink, which advises the world’s most influential marketers and media companies.“The easiest way to talk is with your cheque book,” Kassan said. “But the pressure on a CMO to deliver results is intense.”And even if marketers wanted to force change through financial pressure, it’s not clear it would work. The tech giants have built a base of millions of small- and medium-sized businesses that advertise using their tools, which limits the leverage of any particular brand, said Pedro Earp, chief marketing officer of beer-maker Anheuser-Busch InBev NV.“Some of these issues are complicated and aren’t solvable like that,” Earp said, who sits on Facebook’s client council which consults on how to improve the platform for advertisers. “It’s been a constructive dialog.”But so long as Facebook and Google continue to offer marketers an unparalleled ability to reach consumers and ease of use, they’ll keep dominating the industry, said Wenda Harris Millard, vice president at MediaLink and based in London.“For advertisers it’s kind of like, ‘Do I press the F button or the G button?”’ she said. “It’s hard to stop all this.”To contact the reporters on this story: Joe Mayes in London at jmayes9@bloomberg.net;Angelina Rascouet in Paris at arascouet1@bloomberg.netTo contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Benedikt KammelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg•5 days ago
How One VC Firm Amassed a 24% Stake in Slack Worth $4.6 Billion
(Bloomberg) -- Stewart Butterfield loved the game, but not enough people agreed with him. He spent two years and raised roughly $11 million to build an online adventure game called Glitch that featured garrulous, blue-headed creatures and milk-drunk butterflies.Once people had a chance to play it and Butterfield could track the numbers, the verdict was clear: Glitch was a flop. “There was this night where I just lost faith,” Butterfield said in a podcast interview. He decided in 2012 that it was game over. Butterfield made plans to shut down the company and give the remaining money back to his investors.Andrew Braccia, a partner at venture capital firm Accel, wouldn’t accept the refund. He and other investors urged Butterfield to keep the remaining $5 million and try something else. That turned into Slack Technologies Inc., the maker of corporate chat software that went public Thursday. At the close of trading, Slack’s market value was $19 billion.Accel invested about $200 million in Slack over seven years, largely driven by Braccia’s unwavering faith in Butterfield. As of the stock debut, Accel held 24% of the company, the biggest VC stake in a newly public unicorn in recent history. Those shares are worth $4.6 billion today.Owning such a large chunk of a company is unusual in venture investing for a couple reasons. If a startup appears to be succeeding, founders and other investors compete fiercely for shares. And when things are uncertain, overexposing a fund to one company can be a foolish gamble. “They don’t all look like winners right away,” said Trae Vassallo, managing director of early-stage venture firm Defy.The startup failure rate is 67%, according to research firm CB Insights. Just 1% of those achieve a unicorn valuation of at least $1 billion. “You have to have a clear conviction when making a concentrated bet,” said Byron Deeter, a partner at Bessemer Venture Partners. “If you’re right, you’ll be disproportionately rewarded. But if it goes bad, there’s a real risk.”Slack is what happens when a risky bet pays off. The value of Accel’s stake is greater than that of any private financier of Lyft Inc., Snap Inc., Spotify Technology SA or Twitter Inc., each of which went public at higher market values.In an interview Thursday, Butterfield said Accel was eager to buy into every funding round for Slack—of which there were many—and offered to invest more than expected almost every time. The company had raised more than $1.2 billion in private capital, according to CB Insights data. “Our whole board, the VC members of the board, have worked incredibly hard,” Butterfield said. “I feel incredibly well supported.”In the windup to Slack’s listing, Accel converted about a quarter of its Slack holdings to common stock, allowing it to sell that portion of its shares. Such a transaction could return more than $1 billion for the VC firm, earning back the total sum of several funds. And that doesn’t account for two other Accel companies that have gone public since April, Crowdstrike Holdings Inc. and Pagerduty Inc.In 2012, when Butterfield was convinced he’d failed, Braccia was steadfast, said Bradley Horowitz, who put some of his own money in the game company. That’s probably because Braccia recalled what happened the last time Butterfield made a bad game. It morphed into a popular photo-sharing site called Flickr, which Yahoo! bought for around $25 million in 2005. Braccia, Butterfield and Horowitz all worked together at Yahoo.Horowitz, now a vice president of product at Google, said Braccia “was the one who said ‘keep going.’ He had the determination.” Horowitz joined Braccia in refusing to take his money back when Butterfield was ready to give up. “Stewart could have told me he was building a new coat hanger,” Horowitz said. “I would be all in.”Braccia declined to be interviewed, citing the regulatory quiet period. Bloomberg Beta, the venture capital arm of Bloomberg LP, is also an investor in Slack.In 2015, just as Slack was beginning to gain traction, Braccia explained why he was making such a big bet on the company. Butterfield has an uncanny ability to recover from failure and then rally people around his next idea, Braccia told a crowd at the time: “He’s resilient. He’s been knocked down multiple times, and he’s picked himself back up.”\--With assistance from Ellen Huet.To contact the author of this story: Lizette Chapman in San Francisco at lchapman19@bloomberg.netTo contact the editor responsible for this story: Mark Milian at mmilian@bloomberg.net, Michael HythaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg•6 days ago
Slack Tops $19 Billion Value in Trading Debut After Shunning IPO
(Bloomberg) -- A parade of initial public offerings from Silicon Valley this year has garnered a mixed reception from investors. Slack Technologies Inc. took a different route on Thursday, and saw its shares soar as it went public without an IPO.Slack opened at $38.50 on the New York Stock Exchange Thursday, well above the reference price of $26 that was set for the shares in the direct listing. The stock closed at $38.62, giving the company a market value of $19.5 billion.That’s a huge increase from Slack’s last private funding round in August, which valued the company at $7.1 billion. Thursday’s debut makes Slack the second-most valuable technology company to reach U.S. markets this year, topped only by Uber Technologies Inc. $75 billion value and bypassing Lyft Inc. at $18 billion.What a ‘Direct Listing’ Is, and Why Banks Are Nervous: QuickTakeSlack, which makes software for workers to chat and collaborate on projects, directly listed its shares on the New York Stock Exchange, bypassing the usual fundraising process of an IPO and allowing shareholders to sell right away without a lockup period.A parallel for this unusual type of stock listing is Spotify Technology SA. The music-streaming provider went public using a similar maneuver last year, the last high-profile company to do so. Spotify’s stock is up 13% from its reference price since then.Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. advised Slack on the listing, the same trio of banks that lined up when Spotify went public.Slack Chief Executive Officer Stewart Butterfield said Thursday that the company chose not to have a traditional IPO for a pragmatic reason: It didn’t need the cash. “We’re not ideological crusaders on this stuff,” he said. The direct listing process is a more efficient way to price a stock, he said, “but I don’t think anything comes close to not having to dilute existing shareholders by 10%.”Butterfield said he also wanted to avoid the lockup period. “Especially in a period when you’re locked up, when the supply is so constrained, the psychological impact of that can be a big negative,” he said. “Giving employees the option early is more important.”Raised in a Log Cabin, Slack Chairman Is Now Worth $1.3 BillionButterfield was at the New York Stock Exchange, which was festooned with a Slack banner that read “Your work is our work,” and where a band outside played jazz for the occasion. Earlier that morning, he rang the opening bell, and posted photos on social media, writing, “Got a little cold, but everything is allll right.”This year is on track to be the busiest for public listings in more than a decade. Some have been warmly received. Pinterest Inc. has risen 45% since its March listing, and Zoom Video Communications Inc. has nearly tripled in value. But the two biggest, Uber and Lyft, are trading below their IPO prices.Investors -- and private companies considering a similar path to the public markets -- will have been closely watching the reception to the debut. Slack had been hoping to avoid the first-day pop that often accompanies IPOs and the price swings that can follow, and it largely got its wish: Shares closed less than 1% above their opening price, and traded within 10% of that benchmark all day.Citadel Securities and the banks worked behind the scenes to help kick things off Thursday morning, gathering buy and sell orders to assess a first-trade price.In Slack’s dual-class share structure, super-voting Class B shares must be converted to Class A common shares before they can be sold. The total trading volume on the first day was about 140 million shares, according to data compiled by Bloomberg. That was about 30 million more than expected, according to a person familiar with the banks’ expectations.On Wednesday, Slack said 194 million shares had been converted to common stock, which signals the number that could be sold.Slack going public ends a long journey that started with Tiny Speck, a small video game maker. The company, led by Butterfield, was making a game called Glitch, but it didn’t take off. The team, however, had built an internal tool to chat and share files with each other. They had an inkling that the software could be useful to other teams. In 2014, they launched Slack. Now Butterfield, its co-founder and chief executive officer, is worth more than $1 billion.One of Slack’s earliest believers was Accel, a venture firm that now owns about 24% of the company. Andrew Braccia, an Accel partner and Slack board member, had worked with Butterfield at Yahoo! Bloomberg Beta, the venture capital arm of Bloomberg LP, is also a Slack investor.The service has spread from Silicon Valley into offices around the world, and it does much more than chat. Users can share files, build automated workflows, host video calls, poll colleagues and keep a to-do list. Those who use it tend to adapt quickly, but it has struggled to convey exactly what it is to most of the world, Butterfield said in a recent conference call. “We have to work hard to explain Slack to all the people who have never used it before,” he said. Butterfield called it “one of our biggest challenges and greatest opportunities.”Slack faces competition from some of the world’s most valuable companies, including Microsoft Corp., Alphabet Inc. and Facebook Inc. Slack did prevail, however, over another rival: HipChat, a product from Atlassian Corp. Last year, Slack and Atlassian struck a deal in which Slack bought the assets for HipChat, which was eventually wound down, and Atlassian took a stake in Slack.Ten million people use Slack every day, according to the company. Many workers rely on a free version of the software, but as of April, 645 companies paid more than $100,000 a year for the service. Those big customers make up about 43% of Slack’s revenue, the company said. Like other big-name public debuts this year, Slack is not profitable. It lost $139 million on $401 million of revenue in the fiscal year that ended in January.In contrast to the flagrant cash burning of companies like Uber or Lyft, Slack’s losses have been fairly consistent. But its revenue growth rate has slowed from 110% two years ago to a projected 50% for the fiscal year ending next January.Butterfield said he thinks that the practice of direct listing has the potential to catch on more widely after this week. “I think if this works out in terms of volatility and volume, I would expect anyone who doesn’t really want to raise money will follow that path of just listing,” he said.(Updates shares in second paragraph. Adds bank advisers in sixth paragraph.)\--With assistance from Eric Newcomer and Sonali Basak.To contact the reporter on this story: Ellen Huet in San Francisco at ehuet4@bloomberg.netTo contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Anne VanderMeyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
