In one of the most highly anticipated tech IPOs in recent years, Spotify ended its first day as a publicly traded company on Tuesday with it shares gaining 12.8% and a market value of $26.5 billion.
The music-streaming business managed to hit those high numbers despite its decision to skip the traditional IPO process and instead trade through a direct listing. A direct listing is a cheaper alternative to a traditional IPO in which shares are sold directly to the public without an intermediary. Existing investors and employees who hold shares are able to sell to the public.
Spotify’s shares opened during midday trading on Tuesday at $165.90, up almost 26% from a reference price set by NYSE of $132. The gain eventually retreated somewhat as investors factored in the company’s stiff competition with Apple.
The company’s shares closed at $149.01.
Spotify CEO Daniel Ek wrote in a blog post Monday that the company is not raising capital as part of the listing and noted that its shareholders and employees have been free to buy and sell our stock for years. “So while tomorrow puts us on a bigger stage, it doesn’t change who we are, what we are about, or how we operate,” Ek wrote.
Direct listings have been used before, though typically by much smaller companies. Spotify is the largest company to ever opt for the direct listing.
Still, Spotify managed to have one of the larger tech IPOs in recent years with a closing market value on its Wall Street debut ahead of companies like Twitter and VMWare. Alibaba and Facebook hold the record of biggest closing market values for an IPO.