Spotify share price drops on first day of trading on Wall Street

Shares in music streaming service Spotify dropped off in its second day of trading on Wall Street, following a strong opening performance yesterday. Spotify shares opened at $165.90 (£118), but by early this afternoon, the price had dropped 15 per cent to $140.

Spotify’s opening listing was 34 per cent higher than its initial set reference price, which put the company’s value at nearly $30bn. However, the streaming service’s unusual float, which skirted the big Wall Street banks by offering a so-called direct listing instead of the more traditional initial public offering (IPO), may have made the stock more volatile.

Read more: Spotify starts trading on Wall Street

The company’s launch comes at a difficult time for the US tech sector, as a series of political scandals surrounding companies including Facebook and Amazon has seen share prices tumble in recent weeks. Still, the tech-heavy Nasdaq index rallied today, up two per cent just after midday, local time.

Read more: Tech rout on Wall Street as “house catches fire”

The streaming service also faces stiff competition, as market giants like Apple seek their own expansion in the marketplace. The rapid growth of Apple’s streaming service, Apple Music, could see it catch up to Spotify’s American customer base.

However, in an interview with CBS This Morning on Tuesday, Spotify CEO Daniel Ek seemed unconcerned by the prospect of competition with Apple. “We are about twice the size of them,” he said. “I think we’ve still got some room.”

Less certain for investors, however, is Spotify’s profitability. Despite launching over ten years ago, the streaming service has yet to turn a profit, due largely to high operating costs, particularly the royalties it pays to artists and record labels to play their music.