Spotify preps to go public with 60M subscribers, outpacing Apple
Spotify’s singular focus on music sees it adding subscribers faster than the iPhone company with a streaming app on the side. Spotify has added 20 million paid subscribers in less than a year, while it’s taken Apple Music more than a year and a half to make that progress. Spotify now has 60 million subscribers, compared to Apple Music’s 27 million (as of June).
Spotify’s ability to accelerate its growth rate despite competition from arguably the world’s most powerful company is a testament to the product and community it’s built.
Apple Music offers three-month free trials, comes pre-installed on iPhones and pays big bucks for exclusive early access to top albums. Those advantages might help Apple Music win fans of particular artists, plus mainstream listeners finally switching over from MP3s. Yet Spotify remains the go-to streaming service for music lovers.
Spotify is gearing up for what’s being called a “direct listing,” where the company intends to go public without doing an IPO. Insiders, not the company, will be selling shares to the stock market.
This is a highly unusual move and has been met with widespread skepticism. While many companies dread the IPO process, which involves bankers rounding up institutional investors and determining a price for its debut, it is an opportunity to raise money for the company.
By skipping this, Spotify is potentially missing out on hundreds of millions in proceeds from the IPO, but it could do a secondary offering to raise cash at a later date. Spotify is said to be on track to complete this before the end of the year, which was previously reported by The Wall Street Journal.
Spotify growth has been fueled by several important product developments:
Discover Weekly: Spotify’s wildly popular weekly updated personalized playlist has made it the top choice for music fans trying to find new songs and artists to love. The playlist reached 40 million users its first year, and Spotify has followed it with Release Radar specifically for new tracks. Competitors like Apple and SoundCloud have tried to copy Discover Weekly, but Spotify is entrenching itself as the full-fledged streaming service for taste makers.
Recruiting Hold-Out Artists: While initially stuck with a bad rap for not giving enough royalties to musicians, the payouts have grown significantly alongside Spotify’s subscriber base. The cash, plus the leverage Spotify has built as it becomes a must-have distribution channel if artists want a big hit record, has lured hold-outs like Taylor Swift to adopt Spotify. The public debut could strengthen Spotify’s standing in the music industry, and convince both artist and listener holdouts that it’s built to last.
Google Home + Spotify vs Amazon Alexa: Voice-controlled music is an incredible experience that listeners are buying access to through Amazon and Google’s smart speakers. While Amazon Alexa preferences its own Amazon Prime Music service, Spotify is one of the premier partners for Google Home. It’s already more popular for dedicated music streaming than fellow partners Pandora and Google Music, and recently Google Home began allowing control of Spotify’s free ad-supported service. The partnership with Google Home will become even more important once Apple starts shipping its own HomePod smart speaker.
The No-IPO public offering
Spotify has not spoken publicly about the expected direct listing, but some close to the company believe that it could avoid some of the initial volatility. Bankers usually recommend a lower share price for a first-day “pop,” but many companies have trouble maintaining this in the coming weeks. This could be a way around that, some theorize.
It would also avoid those “lock-up” periods, where insiders can’t sell shares for months after the company goes public. Snap’s stock has been trading down in recent weeks in anticipation of today’s sell off.
If the experiment goes well, we may see other companies replicating it.
But it’s definitely possible that Spotify’s process will create even more volatility. The company hasn’t announced specifics about how it plans to execute this, but part of the reason IPO shares are sold to institutional investors is because they are expected to hold their positions longer.
Instead, Spotify may have to rely on its cache of cool with listeners to drive public support for its share price as it pushes to fend off Apple Music’s invasion of its streaming kingdom.
Reddit raised $200 million in funding and is now valued at $1.8 billion // Link to Article : http://bit.ly/2viaylk
It’s going on a hiring spree and redesigning its website.
Reddit has raised $200 million in new venture funding and is now valued at $1.8 billion, according to CEO Steve Huffman.
The new funding round, the company’s largest ever, should expedite a number of internal product and business efforts, including a redesign of its homepage and its first foray into user-uploaded video, Huffman added in an interview with Recode.
The money comes courtesy of a number of well-known Silicon Valley investors, including firms like Andreessen Horowitz and Sequoia Capital, and individual investors like Y Combinator President Sam Altman (also a board member) and SV Angel’s Ron Conway. It also includes money from the hedge fund Coatue, investment firm Vy Capital and mutual fund giant Fidelity.
Advance Publications — which owns Condé Nast, Reddit’s one-time parent company — did not participate in this funding round but still owns a majority stake in Reddit, according to two sources familiar with the arrangement. Condé Nast CEO Bob Sauerberg sits on Reddit’s board of directors. Bloomberg reported last month that Reddit was raising more money.
Reddit, which bills itself as the “front page of the internet,” has been a longstanding home for all kinds of online communities, both positive and negative, since it was founded in 2005 by Huffman and co-founder Alexis Ohanian. It’s had a tumultuous stretch since its last funding round, when it raised $50 million in 2014. When Huffman returned to Reddit in the summer of 2015 amid a user revolt, he became the company’s third CEO in less than a year.
But things at Reddit have settled down since — and one thing that hasn’t changed much over the past decade is Reddit’s product. The network lets users post and comment on links akin to an early internet chatroom, and has amassed 300 million monthly visitors. But Reddit has also retained its early internet functionality and appearance — it still feels like a product that was created for the internet in 2005.
“We have a lot of perception debt,” Huffman said from the company’s San Francisco headquarters. “Reddit feels old. We don’t want to be associated with old.”
Huffman’s plan for the new funding includes a redesign of reddit.com — the company is literally re-writing all of its code, some of which is more than a decade old. An early version of the new design, which we saw during our interview, looks similar to Facebook’s News Feed or Twitter’s Timeline: A never-ending feed of content broken up into “cards” with more visuals to lure people into the conversations hidden underneath.
“We want Reddit to be more visually appealing,” he explained, “so when new users come to Reddit they have a better sense of what’s there, what it’s for.”
Raising $200 million in 2017 to help redesign a desktop webpage may strike some as odd. But 80 percent of Reddit’s 300 million users still visit Reddit on the web, Huffman said, so its desktop audience is still a major priority.
“We will have, probably relative to our peers, a longer desktop life because of text and keyboards,” Huffman said. “It’s easier to create text from a keyboard. And I don’t know if that’s a good or bad thing, it’s just a thing.”
To create the new product, Reddit has been on a hiring spree. The company has about 230 employees, up from around 140 at the beginning of the year. Huffman would like to end 2017 with around 300 full-time staff.
The money is not solely for the redesign, though. Reddit is also beefing up its video efforts, and recently launched a beta feature that lets users upload videos directly to the site for the first time. It’s possible Reddit could eventually compete for video ad dollars. Usually video ads follow user video — a way to introduce and get users comfortable with the new medium before selling that medium to advertisers.
Reddit has been selling ads for years, though Huffman says it only really started doing so with structure in 2015. Still, he says making money is “not our top priority,” estimating the company spends only about 20 percent of its resources on its advertising business. Huffman declined to share revenue totals. The company is also not profitable.
But Reddit is in a unique position compared to other ad-driven social networks like Facebook and Twitter in that it’s still transitioning to mobile — it only launched its first mobile app in early 2016. Many of its competitors have made mobile a top, if not only, priority, and have been selling mobile ads for years.
But Altman says that he’s been impressed with Reddit’s ability to transition quickly. Only 20 percent of Reddit’s users come from mobile, but they account for 50 percent of the total time spent on the site.
“I wish the company had started on mobile earlier for sure,” he said. “However, I think that it’s been remarkable progress in the last, say, year.”
“It was my No. 1 concern two years ago, and it is now not even in my top three concerns for the company,” he added.
Eventually, though, Altman and Reddit’s other investors will want their money back and then some. Huffman says there are lots of ways for Reddit to exit, none of which he’s focused on at the moment.
“I think there are a lot of paths to liquidity,” Huffman said. “The one that we’re on often ends in an IPO. But we don’t have plans for that in the future that we can see.”
Rolls-Royce has revealed its underlying profits are up by almost 150 per cent in the first half of the year, as strong growth in its sales of Trent engines and services work helped the FTSE 100 company to recover from large costs from past bribery settlements.
Underlying revenue rose 6 per cent to £6.87bn in the half year to June 30, while underlying profit before tax rose 148 per cent to £287m – comfortably beating analysts’ estimates for £158m profit.
The best performing sectors were civil aerospace and nuclear, where revenues rose 14 per cent and 8 per cent respectively – the former was boosted by a 27 per cent increase in deliveries of Trent engines. Revenues in its marine division slipped 15 per cent due to weak offshore markets.
The results mark the beginning of a recovery for the engine maker after it reported the biggest headline loss in its history earlier this year, when it absorbed the impact of its £671m settlement with regulators for past bribery and corruption.
The company’s free cash outflow improved 18 per cent to £339m.
On Monday Rolls-Royce was one of the biggest fallers among UK-listed stocks after the company’s executives warned investors not to take its promise to generate £1bn in free cash flow as a firm target.
Shares in the company had surged 40 per cent in the year-to-date, largely due to expectations of a substantial improvement in cash flow over the next three years.
However, the FT reported last weekend the executives remain concerned that the market could be ignoring the significant operational and market challenges the company still faces.
Commenting on Tuesday’s results, Warren East, chief executive, said:
Rolls-Royce delivered encouraging year-on-year operational progress in the first six months of the year. Civil Aerospace large engine deliveries increased 27% and we made good further progress improving Trent XWB OE economics. Restructuring savings were ahead of plan. Together with a higher than expected benefit from long-term contract accounting adjustments, this resulted in a good set of results, with financial performance ahead of our expectations for the first half.
Looking to the balance of the year, execution and delivery of a number of important milestones across our businesses will be key to achieving our full year expectations. Our outlook for full year profit and cash remains unchanged.
Telecom Italia: JPMorgan, BoFA and Morgan Stanley pitching infrastructure network spin off - report (translated)
01 AUG 2017
Three investment banks are pitching for the spin off of the infrastructure network of Telecom Italia [BIT:TIT], the listed Italian telecommunication company. This was reported by Il Messaggero which quoted unnamed sources.
The banks include JP Morgan, BoFA Merrill Lynch and Morgan Stanley. Over the weekend, a report in Il Sole 24 Ore said that some investment banks were pitching the spin off idea to Vincent Bollore, chairman of majority shareholder Vivendi [EPA:VIV].
The report said that the banks value the network at an enterprise value of 11.1 and 11.9 times the EBITDA or EUR 15bn-EUR 20bn.
stock market ended July's last trading session on a mixed note. Monday's action resembled a sector rotation trade as the four advancing sectors--financials (+0.6%), energy (+0.2%), utilities (+0.4%), and telecom services (+0.4%)--have struggled to keep pace with the broader market throughout the year. On the flip side, the strongest sector in 2017--information technology (-0.5%)--settled near the bottom of the leaderboard. crude oil settled in positive territory for the sixth session in a row thanks to a sharp afternoon rally. The commodity went from a loss of 0.8% to a gain of 1.0% in about an hour, eventually settling higher by 0.9% at a price of $50.20/bbl. Today's advance left crude oil higher by 9.0% for the month of July, it's best month since April 2016. Markets in the region opened mixed before strengthening on the back of strong China data . Broad dollar weakness as the overall theme with Anthony Scaramucci was removed as White House communications director just 10 days after being appointed by Trump, just adding fuel to the fire. Geopolitical risk remains a concern for global growth with no continent being immune from the risk. According to Oliver Wyman banks may need $30-50B in additional capital to support new European units after hard Brexit. RBA left cash target rate unchanged, as expected noting that the recent Aussie strength is more dollar weakness.
Nikkei +0.30% Hang Seng +0.68% CSI +0.36% Shanghai +0.20% Shenzen -0.12%
Eur$ 1.1819 CNH 6.7246 CNY 6.7218 JPY 110.27 GBP 1.3208 CHF 0.9679 RUB$59.9744 WTI$ 50.30 +0.26%
S&P +0.22% EuroStoxx +0.20% FTSE +0.47% Dax +0.10% SMI +0.29%
Macro :
- EU Banking Business to Cost $1 Billion More After Brexit: BZ
- Banks May Be Hit With $50b Capital Needs After Brexit
Keep an eye on :
- AZA IM : Alitalia Tender to Include Preference for Whole Co. Sale: Ansa
- BBVA SM : BBVA Is Said to Mull Sale of Anida: El Confidencial
- BBVA SM : BBVA Sells EU600m Loan Portfolio to Cerberus Capital Affiliate
- DSM NA : DSM Interim Dividend Per Share EU0.58; Raises FY Outlook
- ERICB SS : Cevian Says Ericsson CEO on Right Track With Transformation: DI
- ERICB SS : Cevian Continues to Buy Ericsson B-Shares, Holds 7.03%
- SFER IM : Ferragamo 1H Earnings Weak, Patience Required: Morgan Stanley
- FRE GY : Fresenius SE Second Quarter Net Income Beats Estimates
- FME GY : Fresenius Medical 2Q Operating Income Misses Estimates
- GALP PL : Galp Plans No ‘Relevant’ Refinery Maintenance in Next 6 Months
- GBL BB : GBL 1H Cash Earnings Advance 2.7% as Dividend Income Stabilizes
- HEI GY : HeidelbergCement 2Q Profit Misses Estimates, Confirms Outlook
- HSBA LN : HSBC Appoints Credit Suisse for Up to $2b Share Buyback
- MMT FP : M6 Says CSA Removes 34% Cap on Voting Rights for Shareholders
- PARG SW : Pargesa First Half Net Income CHF252.5 Mln
- RR/ LN : Rolls-Royce Pretax Profit Almost Triples; FY Guidance Unchanged
- SOLB BB : Solvay Raises 2017 Forecast as 2Q Adj. Ebitda Beats Ests.
- TIT IM : Telecom Italia: JPMorgan, BoFA and Morgan Stanley pitching infrastructure network spin off
- VOW3 GY : VW Probe Finds Fraud Committed to Fund Diesel Engine: Politico
- WPG LN : Worldpay Extension of Offer Deadline Until August 8
After Hours Summary: CGNX +8%, ALSN and TXRH +7% higher, SLCA -7%, SIMO -3%, P -1% lower following earnings/guidance... CBMX +50% on acquisition newsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: WG +15.2% (also announces multiple awards valued at $114 mln), CGNX +8.3%, ALSN +7.1%, TXRH +6.8%, HLS +3.6%, HVT +3.4%, OI +2.7%, MATX +2.6%, ICHR +2.3%, CACC +1.2%, TREX +1.1% (light volume)
Companies trading higher in after hours in reaction to news: CBMX +50.5% (CombiMatrix to be acquired in an all-stock merger for approximately $33 million of combined consideration by Invitae), PTI +9.2% (announces updates including PTI-428 cystic fibrosis transmembrane conductance regulator amplifier, PTI-801- new generation CFTR corrector, and PTI-808 CFTR potentiator; appoints Helen Boudreau as CFO effective July 25), NVTA +7.8% (announced two acquisitions - including CBMX; announces $73.5 million private placement offering and reports prelim Q2 results), NEOS +5.4% (initiated after the close with Overweight and $20 tgt at Cantor Fitzgerald), GRPN +4.3% and GRUB +3.4% (announce partnership to bring food delivery to Groupon customers throughout the US; GRUB is acquiring certain assets in 27 company-owned OrderUp food delivery markets from Groupon), LPX +3.1% (ticking higher: Louisiana-Pacific to acquire International Barrier Technology [IBTGF] for $22 mln - US$0.41 per common share), ETP +1% and ETE +1% (Energy Transfer signs agreement w/ The Blackstone Group whereby Blackstone will contribute approximately $1.57 billion in cash in exchange for a 49.9% interest in HoldCo)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: SLCA -6.9%, KONA -5.7%, TMST -4.8%, AMKR -3.1%, SIMO -2.7% (also announces new $200 mln share repurchase program and management to purchase shares), SBAC -2.2%, APAM -1.8%, IDTI -1.7%, P -1.2%
Companies trading lower in after hours in reaction to news: NOG -4% (ticking lower; FCN will replace Northern Oil and Gas in the S&P SmallCap 600), PBYI -2.2% (continued weakness after 2.6% decline today; also announced NERLYNX is now commercially available by prescription in the United States), CHGG -1.8% (confirms the commencement of an underwritten registered public follow-on offering of 8 mln shares of its common stock), INVA -1.6% (proposes offering of $175 mln of convertible senior notes due 2025 in a private placement), NVDA -0.8% (move being attributed to cautious blog mention), IMMU -0.7% (files for approx 34.76 mln share common stock offering by holders)
>>> Up
* Alfa Laval Raised to Buy at Citi
* AstraZeneca Raised to Hold at Independent Research, PT 4,650p
* Aviva Raised to Outperform at Macquarie
* National Grid Raised to Buy at Berenberg
* Schneider Raised to Hold at Jefferies, PT EU60
* Verbund Raised to Buy at SocGen, PT EU19.90
>>> Down
* Allied Minds Cut to Underperform at Jefferies, PT 124p
* ASMI Cut to Equal-weight at Morgan Stanley, PT EU52
* AstraZeneca Cut to Add at AlphaValue
* Enel Cut to Hold at Independent Research, PT EU5.30
* UBI Banca Cut to Hold at SocGen, PT EU4
* Valora Cut to Hold at Baader-Helvea, PT CHF350
>>> Initiation
* Castellum New Overweight at JPMorgan, PT SEK152
>>> Call
>> Stock
* Credit Suisse Added to Focus List Europe at Citigroup
Asia Mid-Session Market Update: China PMIs remain in expansion; RBA leaves rate unchanged noting Dollar weakness
***Asia Summary***
- Markets in the region opened mixed before strengthening on the back of strong China data . Broad dollar weakness as the overall theme with Anthony Scaramucci was removed as White House communications director just 10 days after being appointed by Trump, just adding fuel to the fire. Geopolitical risk remains a concern for global growth with no continent being immune from the risk. According to Oliver Wyman banks may need $30-50B in additional capital to support new European units after hard Brexit. RBA left cash target rate unchanged, as expected noting that the recent Aussie strength is more dollar weakness.
- Regional PMI Manufacturing PMIs were generally weaker with only Malaysia and Taiwan rising m/m. China Caixin PMI manufacturing rose to its highest reading since March and had its second consecutive month of expansion. South Korea had a large trade surplus at $10.6B, exports rose to US, EU and China. China’s OMO were lower from the prior day, while the PBOC set the yuan mid-point rate at its strongest setting since Oct of last year.
***Key economic data***
- (CN) CHINA JUL CAIXIN PMI MANUFACTURING: 51.1 V 50.4E (highest reading since March, 2nd consecutive month of expansion)
- (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED
- (KR) SOUTH KOREA JULY CPI M/M: 0.2% V 0.1%E; Y/Y: 2.2% V 2.1%E; CPI CORE Y/Y: 1.8% V 1.6%E
- (AU) AUSTRALIA JUL AIG PERFORMANCE OF MANUFACTURING INDEX: 56.0 V 55.0 PRIOR
- (KR) SOUTH KOREA JULY TRADE BALANCE: $10.6B V $8.7BE
- (JP) JAPAN JUL FINAL PMI MANUFACTURING: 52.1 V 52.2 PRELIM
- (KR) SOUTH KOREA JUL PMI MANUFACTURING: 49.1 V 50.1 PRIOR
***Speakers and Press***
China
- (CN) PBOC Assistant Gov: PBOC will ensure smooth, orderly deleveraging - Chinese press
- (CN) PBOC has discovered operational violations among 40 Chinese banks and issued business correction orders with a compliance period of up to six months
Korea
- (KR) US military detected highly unusual and unprecedented levels of North Korean submarine activity and evidence of an ejection test in the days following recent ICBM launch
Japan
-(JP) Japan PM Abe said to be considering former ministers Motegi (trade) and Onodera (defense) for key positions during reshuffle - Japan press
- (JP) Japan Chief Cabinet Sec Suga: Confirms Abe to reshuffle cabinet on Aug 3rd
- (JP) Japan Fin Min Aso: Next US/Japan economic dialogue meeting is not set; will discuss tariffs on frozen beef imports in talks with US
Other
- (PH) Philippine Central Bank Gov Espenilla: Economic expansion is durable and broad based; CPI forecast points to near the midpoint of the 2017-19 range
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.2%, Hang Seng +0.8%, Shanghai Composite +0.4%, ASX200 +0.6%, Kospi +1.0%
- Equity Futures: S&P500 +0.2%; Nasdaq +0.4%, Dax +0.2%, FTSE100 +0.3%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1837-1.1820; JPY 110.43-110.00; AUD 0.8043-0.7997; NZD 0.7525-0.7504
- Aug Gold +0.2% at 1,268/oz; Sept Crude Oil +0.2% at $50.27/brl; Sept Copper +0.2% at $2.89/lb
- (CN) China PBOC OMO injects CNY170B in 7-day and 14-day reverse repos v CNY240B prior in 7-day
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.7148 (strongest setting since Oct 2016) V 6.7283 PRIOR
- (CN) China MOF suspends 10-yr bond from trading due to abnormal fluctuations
- JGB (JP) Japan MoF sells ¥1.86T v ¥2.3T indicated in 10-yr 0.1% (prior 0.1%) JGBs; Avg yield: 0.073% v 0.079% prior; bid to cover: 4.21x v 4.77x prior
- (HK) Overnight Hong Kong dollar interbank rate -43bps to 0.28286%
***Equities notable movers***
Hong Kong/China
- Eve Energy, 300014.CN Reports H1 net CNY232.5M, +161.4% y/y; +4.6%
- Shanghai Electric, 2727.HK Gets regulatory approval to buy assets from group via share issue; +1.9%
Japan
- Japan Airlines, 9201.JP Reports Q1 Net ¥19.6B v ¥14.7B y/y; Op ¥24.7B v ¥22.1B y/y; Rev ¥314.8B v ¥297.2B y/y; +2.2%
Australia
- iSentia Group, ISD.AU Guides FY17 underying EBITDA A$41.5M v A$44Me (prior A$44M); Rev A$155M (prior A$162M); The board has decided to fully write down the value of the King Content business for A$37.08M; -18.9%
- Doray Minerals, DRM.AU Announces assay results from drilling at Deflector Gold Copper Mine; +7.7%
Korea
- Hyundai Heavy, 009540.KR Reports Q2 (KRW) Net 69.2B v 137.5B y/y; Op 151.7b v 142Be; Rev 4.63T v 4.6Te; +4.3%