Spotify has become a publicly listed company, after launching an unorthodox initial public offering on the New York Stock Exchange (NYSE), which won’t actually see the firm raise new money. 

Shares in the company ended up 12.9 percent on their first day of trade, valuing the world’s largest streaming music service at $26.5 billion.

This initial successes could mark a sea change in how companies list in the future, perhaps without relying on the aid of Wall Street underwriters.

Usually, businesses looking to IPO will sell new shares to institutional investors before the first day of trading. Instead, Spotify is allowing its existing shareholders to directly sell their holdings to the stock market.

This acts as a test case for other companies tempted to list directly, and could hit bankers as they lose out on millions of dollars in underwriting fees.

A new kind of IPO

Known as a ‘direct listing’, this allows any VCs, employees or investors who bought shares on secondary markets to sell them off and make money right away.

This is interesting; not only because it makes Spotify the biggest consumer tech company to go public since Snap’s disappointing debut early last year, but because it shows startups that there are a wealth of different options when it comes to raising funds, or in this case, list on the stock exchange.

As Spotify founder and CEO Daniel Ek put it in a statement entitled “tomorrow”, the company is doing things “a little differently”.

“Normally, companies ring bells. Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment. Normally, companies don’t pursue a direct listing. While I appreciate that this path makes sense for most, Spotify has never been a normal kind of company,” Ek said.

“As I mentioned during our Investor Day, our focus isn’t on the initial splash. Instead, we will be working on trying to build, plan, and imagine for the long term.”

An uncertain future for Spotify

Shareholders and employees have been free to buy and sell their Spotify stock for years, so this listing will not be a chance for existing investors to exit their investments; they could have done so all along.

In fact, some shares were already being sold before the announcement was made public. According to experts, about $500m in Spotify shares have been traded over the past few weeks in the lead-up to the direct listing. Those trades happened at share prices that valued the company anywhere between $22bn and $25bn.

To name one such deal, Nordic telecommunications operator Telia Co. AB (TELIA.SK) sold its entire holding in Spotify Technology SA (SPOT) to institutional investors for $272m last Thursday. Others, like such as minority shareholder and early investor Lakestar, are in no rush to sell their shares.

Klaus Hommels, Lakestar founder and CEO, told Business Insider he thinks Spotify could be a $100bn company and reach 700 million subscribers.

He could be right. Spotify is now one of the world’s leading digital music-streaming services. Since it was founded in in Stockholm in 2006 it has gained at least 60 million subscribers and has 140 million active users, but is yet to turn a profit.

Setting a trend?

Direct listings are unheard of for companies of Spotify’s size, so it’s hardly surprising that the eyes of the tech and business world will be fixed on Spotify’s performance. 

Alexander Mckendrick, head of digital at Burstimo, commented on the listing. “The Spotify IPO is monumental for the music industry and music promotion companies which operate within it.

“We know that Spotify are running at a loss, but the success of the company will be a huge influence on the industry as a whole. Companies such as Amazon have been running at a loss for many years to be able to achieve industry-changing services. Similar to Spotify, Amazon has created a marketplace which allows any company to sell any product, and if their product is good enough they can compete with the largest brands in the world, and at a lower cost. Now consumers couldn’t imagine a world without Amazon Prime,” he added.

Are other companies going to follow in Spotify’s footsteps? We don’t quite know, but even if its listing doesn’t usher in a new ear of IPOs, 2018 is set to be a busy year for many companies looking to go public.

In February, Dropbox filed an S-1 prospectus with its intention for an IPO and just last month, it did – valued at approximately between $8bn and $9bn.

San Francisco electronic signature company DocuSign Inc., told Marketwatch that it plans to go public in “early 2018”; and filed its first regulatory filing last March.

Other companies with IPOs currently in the pipeline include: SurveyMonkey, Glassdoor, Pivotal Software, Bloom Energy and Adaptive Insights.