France-based independent music streaming platform Deezer is now publicly traded after it merged with a SPAC, I2PO. Whereas these blank-check companies are popular in the U.S., globally, most companies still list through a traditional IPO.
Deezer is now listed in Euronext Paris. The stock crashed on its first trading day to as low as 5.52 euros before settling the day at 6 euros. The stock is now 40 percent below its SPAC IPO price. SPACs have been struggling, and now some mergers are being called off.
Deezer tried to IPO in 2015 but backed out
This is Deezer’s second attempt at going public. It tried to IPO in 2015 but backed off as market sentiment soured.
The stock has had a rough start. Wary of a post-merger sell-off, investors in the U.S. have been redeeming their units during merger voting. By redeeming, the investors get the money they paid for the IPO plus any interest accrued in the SPAC trust account, which can work out better than keeping the stock.
Spotify stock also crashed in 2022
The crash in Deezer stock after listing isn't shocking. Rival Spotify also crashed this year, to its low as a publicly traded stock. Spotify’s earnings have disappointed for the last two quarters, and in the first quarter of 2022, it missed its paid subscriber growth estimate. Amid the Fed’s aggressive rate hikes, investors have shunned growth stocks and turned to value names.
Deezer is the second-largest independent music streaming company
Deezer is the world's second-largest independent streaming company, and Spotify is the largest. That ranking by MIDiA Research doesn't take into account non-independent streaming companies that are part of conglomerates, however, such as Amazon Music, Apple Music, YouTube, NetEase Music, and Tencent Music. Founded in 2007, Deezer boasts more than 90 million tracks.
Deezer has 9.6 million subscribers globally
Despite its 9.6 million subscribers and strong presence in France and Brazil, Deezer's global market share is in the low single digits. Spotify had 422 million monthly active users and 182 million paying subscribers at the end of the first quarter of 2022.
Deezer posted revenue of 400 million euros in 2021 and has over 600 employees globally. The SPAC merger valued Deezer at around $1.1 billion and the company received 143 million euros cash from the deal.
How to invest in Deezer stock from the U.S.
Since Deezer isn't listed on U.S. markets, to trade its stock, you would need to contact a broker that lets you trade Paris-listed stocks.