French Music Service Deezer Slumps On Market Debut

French music streaming service Deezer sank sharply in early trading after its market debut in Paris, which followed an aborted flotation attempt in 2015.

Its shares opened at 8.50 euros (£7.30) but were down about 22 percent to around 6.60 euros by late morning BST.

Deezer holds about 2 percent of the online music streaming market, compared to about 31 percent for its largest rival, Sweden’s Spotify, which held its own IPO in 2018.

Spotify has itself fallen by about 60 percent since the beginning of the year amidst difficult conditions for tech stocks, with Wall Street recently concluding its worst semester since 1970 and the tech-heavy Nasdaq the worst since it was established in 1971.

Competition

Deezer’s other rivals include music services operated by Apple, Amazon, Google and Tencent.

In 2015 the company put off an attempted flotation citing poor market conditions, which at the time included the recent introduction of Apple Music as a competitor and a disappointing earnings report by Netflix.

In an interview with AFP on Monday Deezer chief executive Jeronimo Folgueira said conditions were now more favourable for the launch. “Music streaming is really established, it represents two-thirds of the revenues of recorded music, which wasn’t the case before,” he said.

The company also this time relied on an alliance with a special-purpose acqusition company (SPAC) for the flotation, a technique that has grown in popularity recently and which it considered as presenting less risk.

Unicorn

The deal with SPAC I2PO valued Deezer at 1.05 billion euros, making Deezer France’s first “unicorn” to list its shares.

The company said it would use funds from the IPO to increase its turnover to 1bn euros by 2025 and to return to operating profitability. Deezer’s losses last year reached 123m euros on a turnover of 400m euros.

Folgueira said the company intended to work with partners to enter new markets. “We know that we can conquer market share and compete with the big players,” he said.