Deezer, the French rival of Spotify, crashes in its IPO

Spotify’s French rival Deezer has failed to capture investor interest in its debut on the Paris market, causing its shares to fall 27% in its debut on Tuesday. Deezer shares started trading at 8.50 euros and then fell to 6.2 euros.

It was in April that Deezer announced its plans to go public in Paris, in an operation that valued the business at just over 1,000 million euros, with a Special Purpose Acquisition Company (SPAC) created for the operation. The company recorded losses of 123 million in its last fiscal year, with revenues of 400 million.

Platforms like Deezer represent a change in the music industry, which has transformed the business and has changed the buying and selling and downloading of music, for the online listening of songs stored remotely.

“The industry is super competitive: There are multiple services (Amazon Prime, Apple Music, etc.) run by large US companies with a lot of capital and strong ecosystems that can subsidize their business with other sources of income and therefore are not dependent on success of their music platforms, as opposed to ‘pure-play’ companies,” said Manuel Mühl, an analyst at DZ Bank.

“In this sector we prefer to invest in content (the record companies) over the platforms that have to pay for that content in order to distribute it and monetize it through ads and subscriptions,” he added.

The debut of the French music platform comes seven years after a first attempt that forced the company to postpone its IPO plans due to market conditions. Deezer still has a long way to go before it can take on Spotify, one of its main rivals, which carried out its initial public offering in 2018.

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Deezer, the French rival of Spotify, crashes in its IPO