(Reuters) – Music streaming service Spotify on Wednesday filed for a direct itemizing of its shares, laying out monetary knowledge for the primary time that cheered some analysts however led others to query the way it may flip a revenue from its rising subscriber base.

Spotify, which needs to commerce as SPOT on the New York Inventory Trade, is taking an uncommon path to the U.S. public markets, with a direct itemizing that may let buyers and staff promote shares with out the corporate elevating new capital or hiring a Wall Avenue financial institution or dealer to underwrite the providing.

As a result of the corporate is not going to subject any new shares, it didn’t specify a list value. Based mostly on non-public transactions, it’s valued at roughly $19 billion, in response to Reuters calculations.

Spotify, launched in 2008 and obtainable in additional than 60 international locations, is the most important music streaming firm on the planet and counts companies from Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Alphabet Inc‘s Google as its essential rivals.

RISING SALES, COSTS IN CHECK

Within the submitting, Spotify laid out detailed monetary knowledge for the primary time, exhibiting rising income and comparatively regular working prices, which analysts took as a optimistic.

Income rose 39 p.c to four.09 billion euros ($four.99 billion) in 2017, from 2.95 billion euros a yr earlier. Its working loss widened to 378 million euros in 2017 from 349 million euros.

Its web loss ballooned 129 p.c in 2017, pushed principally by financing prices associated to a 2016 deal through which Sweden-based Spotify raised $1 billion in debt that might convert to shares upon an preliminary public providing.

“The income continues to develop however specifically their prices are rising slower than income, which is strictly what you count on in a enterprise like this,” stated Jay Ritter, an professional in preliminary public choices and professor on the College of Florida.

Spotify in contrast its aspirations to the attain of Fb (FB.O) and YouTube. “We consider the universality of music provides us the chance to succeed in most of the over three.6 billion web customers globally,” it stated.

With 71 million premium subscribers globally, Spotify has about twice as many paying clients as music streaming runner up Apple, with 36 million. Together with those that hearken to advertising-supported streams, Spotify has about 159 million month-to-month common customers.

Amazon Music Limitless has 16 million paying subscribers, and Pandora Media Inc (P.N) has 5.48 million complete subscribers.

Google has not stated what number of subscribers it has to Google Play, its music streaming service.

Spotify’s premium subscription prices $9.99 a month, however it stated it noticed nice potential in its ad-supported service, which Apple doesn’t supply.

“With our ad-supported service, we consider there’s a giant alternative to develop customers and acquire market share from conventional terrestrial radio,” Spotify stated.

The online proportion of subscribers who left Spotify’s paid-for service, or churn, fell to five.1 p.c of paying clients on the finish of 2017, from 6.9 p.c at first of 2016, the corporate stated.

“This has been a query we’ve been questioning for a very long time: how sustainable is Spotify’s mannequin? That is the very first time we’re seeing public disclosure about churn, and the information there may be actually good,” stated Larry Miller, head of the music enterprise program at New York College’s Steinhardt College.

Spotify calculated that clients introduced in three.6 instances extra income over their life as a person than the corporate spent on advertising to draw them, as of the top of 2017, serving to enhance free money stream to 109 million euros by the top of final yr.

Nonetheless, in going face to face in opposition to Apple, Amazon and others, Spotify is “competing in opposition to firms that by no means must make a dime on music as a standalone enterprise and that the truth is use it to drive different elements of their enterprise,” Miller stated.

Apple and Alphabet additionally management the 2 essential working techniques utilized by smartphones, iOS and Android. They and Amazon are all creating laptop assistants, reminiscent of Amazon’s Alexa and Apple’s Siri, that would give the larger firms benefits.

“A lot of our rivals take pleasure in aggressive benefits reminiscent of higher title recognition, legacy working histories, and bigger advertising budgets, in addition to higher monetary, technical, human, and different assets,” Spotify stated in its submitting.

Apple has launched large advertising campaigns round its service and added subscribers quickly within the final three years. “I don’t suppose there’s any doubt that the tempo of competitors this yr has quickened,” Miller stated.

Spotify has a strong ally, within the music arm of China’s Tencent Holdings Ltd (0700.HK). The businesses in December stated they might purchase minority stakes in one another, serving to improve publicity to one another’s core markets.

STOCK COULD BE VOLATILE

A direct itemizing doesn’t dilute possession, as would occur with a traditional preliminary public providing, and saves tons of of thousands and thousands of in underwriting charges. Nevertheless it additionally frees current house owners from any lockup interval limiting them from promoting their shares following the itemizing.

Underwriters that present value stability for brand spanking new listings aren’t utilized in a direct itemizing, which may imply a risky begin for Spotify shares in public.

Shares commerce privately in a large band. Spotify is valued between $16.eight billion and $22.5 billion, primarily based on latest unusual share costs between $95 and $127.50 within the non-public markets in February and 178 billion shares estimated excellent by the top of February, in response to its submitting.

Synovus Belief portfolio supervisor Dan Morgan described Spotify as “attention-grabbing,” however questioned how shortly it would turn into worthwhile.

“How can Spotify monetize its person base past a $5-$15 month-to-month subscription payment?,” Morgan requested.