Connect with us

Latest News

Spotify saves millions by direct listing on Wall Street

Published

on

Daniel Ek, the chief executive of streaming service Spotify, is clearly a master of understatement.

In a blog published ahead of the company’s stock market flotation today, he warned employees and customers: “I have no doubt there will be ups and downs.”

That is certainly likely to be the case in shares of this business. Markets are choppy enough right now, particularly in shares of technology companies, following Donald Trump’s recent public sabre-rattling against the likes of Amazon.

And Spotify is taking things one step further with a very unorthodox approach to floating on the stock market.

Normally with an Initial Public Offering (IPO), companies coming to market hire investment banks to advise on the process, organise a roadshow with would-be investors and help market the shares.

Crucially, these banks also “underwrite” the offer, meaning that they agree – at a price – to buy any shares that go unsold at the flotation. This ensures that there is stability in the market when the shares begin trading.

In the case of Spotify, it has opted for a so-called “direct listing”. It has hired Goldman Sachs, Morgan Stanley, and the boutique investment bank Allen & Company as financial advisers. But they will not be underwriting the issue as there are no new shares being sold.

The shares will simply float on the New York Stock Exchange, with no banks to mop up any excess stock, no-one to set the share price via the underwriting process and no-one to allocate shares to investors.

This approach will save Spotify tens of millions of dollars in fees. But it could mean trading in the shares will be exceptionally volatile as a result. The shares will simply find their own price, depending on how many buyers and sellers there are, while it could take some time for a price even to be established.

NEW YORK - SEPTEMBER 16:  A Wall St. sign next to the New York Stock Exchange (NYSE) September 16, 2008 in New York City. U.S. stocks continued to drop Tuesday morning for the second consecutive day, following Monday`s loss of 4.4%,  its worst single day loss since 2001.  (Photo by Spencer Platt/Getty Images)
Image:
Spotify has taken an unorthodox approach for its Wall Street debut

There’s also another significant difference between Spotify’s direct listing and the traditional IPO approach.

Under the latter, existing shareholders and “insiders”, such as executives, are usually subject to a lock-in period during which they are restricted from selling shares, typically for 180 days.

This is to prevent the market being flooded with shares, but will not apply in this instance. Mr Ek, who owns 25.7% of the company, will be free to sell from the get-go, as will Martin Lorentzon, his co-founder, who owns 13.2%.

So there are a lot of reasons why trading in these shares will be more choppy than usual.

Yet there are very good reasons why Spotify has taken this approach.

The first, most obviously, is to save money.

The second is that Spotify does not need to raise any new capital – the IPO is merely a way of letting existing shareholders sell some shares.

The third is that, as this is a business well-understood by the public, there is no need to put on roadshows marketing Spotify to investors.

And a fourth is that there is likely to be significant demand from retail investors, mainly subscribers and fans of Spotify, who will take the view that they will want to own shares in it at any price.

Spotify can legitimately argue that, for once, such investors are being allowed to buy its shares on a level playing field alongside the big battalions of institutional investors on Wall Street and in the City.

The market professionals, due to their close relationships with the underwriters, invariably get in first.

Spotify can also point to some of the more volatile stock market debuts endured by other tech companies.

Shares of Snap, the company behind Snapchat, flew to a 44% premium on the day they came to market in March last year. By July, though, they were trading at a discount to their IPO price.

Blue Apron, a meal kit maker that came to market in June last year, is another flopperoo. Its shares are down 80% from the IPO price.

Both had come to market via the traditional IPO route and could be forgiven, given the subsequent turbulence in their shares, for asking what they paid the investment banks advising on the IPO all that money to do.

And, having looked at those examples, Spotify might legitimately ask how much worse it can do.

For that reason, even though they will not profit greatly from this IPO, Wall Street’s major investment banks have much riding on it.

The likes of Uber and AirBnB, too, will be watching closely. They are thinking of coming to market and, as tech companies with a high profile similar to that of Spotify, may be tempted to go down the same route if they see the Swedish company get away with it.

Ironically, this is one instance where an element on Wall Street will be delighted to see a company coming to market and suffering a big drop in its shares.

Source link

Latest News

US-Mexico border crisis: Vehicles form barrier at Texas crossing to deter Haitian migrants – as VP Kamala Harris criticises ‘horrible’ tactics | US News

Published

on

Parked vehicles have created a steel barrier which stretches for miles along the US border with Mexico in the latest measure to deter migrants from crossing into Texas.

The US has been expelling Haitians from a large makeshift camp at the border, which at one point had attracted more than 12,000 migrants.

Around 8,600 people remain at the camp beneath the Del Rio International Bridge, which spans the Rio Grande from Texas to Mexico’s Ciudad Acuna, after more than 3,000 migrants were moved.

Texas Department of Safety vehicles line up along the bank of the Rio Grande near an encampment of migrants, many from Haiti, near the Del Rio International Bridge, Tuesday, Sept. 21, 2021, in Del Rio, Texas. The U.S. is flying Haitians camped in a Texas border town back to their homeland and blocking others from crossing the border from Mexico. 
PIC:AP
Image:
The vehicles have been lined up along the bank of the Rio Grande near the camp. Pic: AP

Law enforcement officers on horseback were pictured using what appeared to be aggressive tactics against the migrants – and a barrier has now been set up along the border, using vehicles belonging to the Texas National Guard and the Texas Department of Public Safety.

Greg Abbott, the Republican governor of Texas, has backed his approval of the tactics – and criticised the Biden administration for not doing more, claiming local people and officials had “taken the lead on securing the border”.

But US Vice President Kamala Harris criticised the way the migrants had been treated, when she said: “What I saw depicted, those individuals on horseback treating human beings the way they were, was horrible.”

She added she supported an investigation into the horseback incidents, while homeland security officials called the images “extremely troubling”.

In recent days, US authorities have removed at least 4,000 people from the site for processing in detention centres.

More than 500 Haitians have been deported to their homeland on four flights, with repatriations set to continue on a regular basis, the US Department of Homeland Security said.

A U.S. border patrol officer grabs the shirt of a migrant trying to return to the United States along the Rio Grande river, after having crossed from the United States into Mexico to buy food, as seen from Ciudad Acuna, in Ciudad Acuna, Mexico September 19, 2021. REUTERS/Daniel Becerril
Image:
A migrant is pursued by a US patrol along the Rio Grande river

Some of those returned reacted angrily as they stepped off flights at Port-au-Prince airport in the Haitian capital after spending large amounts of money to travel from the troubled Caribbean nation via South America, hoping for a better life in the US.

The disturbances underscored the instability in the Caribbean nation – it is the poorest in the Western hemisphere, where a presidential assassination, rising gang violence, and a major earthquake have spread chaos in recent weeks.

The rapid expulsions were made possible by a pandemic-related authority adopted by former president Donald Trump in March 2020, which allows for migrants to be immediately removed from the country without an opportunity to seek asylum.

Unaccompanied children are exempt from the order, a decision which was made by President Joe Biden.

 United States Border Patrol agent on horseback tries to stop a Haitian migrant from entering an encampment on the banks of the Rio Grande near the Acuna Del Rio International Bridge in Del Rio, Texas on September 19, 2021. - The United States said Saturday it would ramp up deportation flights for thousands of migrants who flooded into the Texas border city of Del Rio, as authorities scramble to alleviate a burgeoning crisis for President Joe Biden's administration
Image:
Tactics by US border patrols on horseback have been widely criticised. Pic: Getty Images
Migrants seeking asylum in the U.S. take shelter in make-shift migrant camp near the International Bridge between Mexico and the U.S., as they wait to be processed, in Del Rio, Texas, U.S. September 21, 2021. REUTERS/Go Nakamura
Image:
Migrants seeking asylum in the US take shelter near the Del Rio International Bridge

Mexico has also begun moving Haitian migrants away from the border, authorities said on Tuesday, signalling their support for the US as the situation creates a political headache for Mr Biden.

Republican politicians with an eye on the 2022 midterm elections, when they will bid to retake control of Congress, have been quick to portray the camp as the result of a push to end some migration restrictions.

There are also reports that some of the Haitian migrants facing expulsion back to their homeland are instead being released in the US, with some observed at the Del Rio bus station by Associated Press journalists.

Source link

Continue Reading

Latest News

Lithuanian defence ministry urges people to ‘throw away’ Chinese phones after discovering censorship tools | Science & Tech News

Published

on

The Lithuanian Ministry of Defence has urged people to stop buying Chinese phones and throw away the ones they already possess after discovering censorship software.

It followed a report from the country’s National Cyber Security Centre (NCSC) which found that Xiaomi devices were censoring terms deemed to be offensive to Beijing.

According to an analysis by the Lithuanian NCSC, the Chinese company’s flagship devices sold in Europe have a built-in ability to detect and censor particular terms.

The phrases included “demonstration”, “free Tibet”, “long live Taiwan independence”, and “church” according to the Lithuanian authorities.

Although the censorship capability had been turned off for devices in the European Union, the ministry of defence warned that it could be turned on remotely.

“Our recommendation is to not buy new Chinese phones, and to get rid of those already purchased as fast as reasonably possible,” said Defence Deputy Minister Margiris Abukevicius, according to Reuters.

Please use Chrome browser for a more accessible video player

Chinese Ambassador banned from parliament: ‘Standing up for free speech is critical’

A spokesperson for Xiaomi declined to comment when contacted by Sky News.

The call to throw away Chinese phones comes amid growing tensions between Lithuania and China over the former’s support for Taiwan – which China claims as part of its own territory.

China demanded Lithuania recall its ambassador in Beijing last month and recalled its own envoy from Vilnius in a protest over Taiwan announcing its mission in the country would use the name of Taiwan, instead of the city of Taipei, which is typically used in other European nations and in the US.

Professor Alan Woodward, a cyber security expert at the University of Surrey, told Sky News: “We all know there are different builds of phones for different countries. If you want to sell a device in a country then you have to obey the laws there.

“But to have censorship software left in that can be remotely activated… that’s a whole different level of one country effectively exporting its domestic regulations via technology,” he said.

Professor Woodward said he could understand the thought process behind the Lithuanian warning: that if one Chinese vendor has included a censorship capability to please Beijing then that made it harder to trust others haven’t done so too.

“Lithuania is a small market so I can imagine this might blow over, but the censorship software seemed to specifically be addressing items that were part of the tension between the two countries,” added Professor Woodward.

“That starts to look like a deliberate attempt to interfere,” he said.

“I’m sure other countries are also looking at these devices, so it behoves the Chinese government to make sure that they aren’t trying to export their censorship regulations elsewhere or else they could destroy trust in all Chinese vendors, and that won’t end well for anyone.”

Source link

Continue Reading

Latest News

Boris Johnson says France needs to ‘get a grip’ amid anger over AUKUS pact | Politics News

Published

on

Boris Johnson has said France should get over its anger at a partnership between the UK, US and Australia that saw the latter pull out of a major contract with Paris for submarines.

“What I want to say about that is I just think it’s time for some of our dearest friends around the world to prenez un grip [get a grip] about all this and donnez-moi un break [give me a break],” the prime minister said when asked about the continuing row over the AUKUS initiative.

“This is fundamentally a great step forward for global security. It’s three very like-minded allies standing shoulder to shoulder and creating a new partnership for the sharing of technology.

Please use Chrome browser for a more accessible video player

‘AUKUS alliance will bring us closer than ever’

“It’s not exclusive, it’s not trying to shoulder anybody out. It is not adversarial towards China, for instance.

“It is there to intensify links and friendship between three countries in a way that I think will be beneficial for things that we believe in.”

The AUKUS deal saw the UK, Australia and the US form a trilateral security pact to develop and deploy nuclear-powered submarines, adding to the Western military presence in the Pacific region.

Nuclear-powered submarines are superior to their diesel counterparts, as they can operate more quietly and stay underwater for longer.

France recalled its ambassadors to the United States and Australia in a backlash over the new security partnership, with foreign minister Jean-Yves Le Drian describing it as a “stab in the back”.

Source link

Continue Reading

Trending