Investors in Spotify raised its valuation to approximately $16 billion, with the figure being based on recent trades of the company's private stock, Reuters reported on Wednesday, citing sources familiar with the matter. No specific trades have been mentioned by the report and it's currently unclear how many shares of Spotify recently changed hands but seeing how the firm was said to be valued at about $13 billion only three months ago, the volume of traded shares was presumably significant to warrant an increase in value of around 23 percentage points.
Some industry watchers are speculating that the company's valuation could see another major jump in the near future as the largest music streaming service on the planet moves closer to an initial public offering which has reportedly been in the making for some time now. The multinational tech firm has been exploring the idea of an IPO since at least late 2016 after its revenue started outpacing its losses by a significant margin, signaling that Spotify is on the track to profitability. The company's recent successes were best outlined by its jump in paying subscribers of whom Spotify had over 60 million as of this July, indicating that its risky expansion-first business model will eventually help it to capitalize on its growing user base which currently amounts to approximately 140 million people. Spotify is now said to be pursuing an IPO in an active manner and reportedly intends to officially file for a public listing in late 2017, sources said, indicating that a roadshow and an eventual IPO are to be expected by the second quarter of 2018.
While Spotify has been renegotiating its music licensing agreements and diversifying its portfolio to a degree in recent times, it's still unclear what kind of platform is the company planning to use to convince investors to back its high-profile listing. The main goal of every IPO is to raise cash and Spotify will be expected to detail what it intends to finance with any funds it generates with a public listing. Apart from a traditional expansion, the music streaming platform may opt to ramp up its diversification efforts going forward or decide for a combination of both, some industry watchers previously said. While Spotify has yet to publicly disclose its IPO plans, a number of industry sources continue to speculate that the company will seek a valuation of at least $20 billion once it goes public.