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How Sony Benefited from Spotify’s Direct Listing

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Apr. 9 2018, Published 8:41 a.m. ET

Sony Music Entertainment sold 17.2% of its Spotify holdings

Spotify (SPOT), which went public on Tuesday, April 3, 2018, has been acquiring music from big music labels by giving them a stake in the company. As such, Sony’s (SNE) Sony Music Entertainment (or SME) has become one of Spotify’s biggest shareholders.

According to a note to investors, SME, which held 5.7% of Spotify’s shares, sold 17.2% of its holdings in the company on Tuesday. That was about 1.7 million shares at a closing price of $149.01 on April 3, which means SME would have cashed out at around $260 million.

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Direct listing gives early investors an added advantage

Now that SME owns less than 5% of Spotify’s shares, it’s no longer obligated to disclose changes in its Spotify stake, according to the SEC (Securities and Exchange Commission).

That’s a prime example of how early investors can easily cash out on their investments and possibly make a good profit through the direct listing method, as we noted in the previous part of this series.

Time Warner’s (TWX) Warner Music Group and Comcast’s (CMCSA) Universal Music Group also own a good chunk of Spotify stock. However, it’s not known whether they sold their shares since they hold less than 5% of Spotify shares, which means they do not have to disclose those details.

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