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charlesarthur : listing   2

Ho, ho, ho, Xiaomi • Bloomberg Gadfly
Tim Culpan:
<p>Xiaomi Corp. is set to pull in revenue of $17bn to $18bn this year, ahead of its own target, Reuters reported Friday, citing the company's comments to bankers.That's impressive, but believable. Xiaomi has had a great year.

Stretching the credibility scale, though, are estimates that net income could hit $1bn. They're banker projections, Reuters notes, not necessarily Xiaomi's. The company later confirmed to Bloomberg News that revenue topped $15bn within the first 10 months of 2017, without commenting on earnings.If those profit numbers are true, it would mean the smartphone and device maker will deliver a net income margin of as much as 5.9%. That's astounding. An operating margin of 5.9% would be pretty incredible, but a net margin that high would have Xiaomi well ahead of almost everyone in the market - up with Samsung Electronics Co. and Huawei Technologies Co.

Suffice to say, Xiaomi is no Samsung. But bankers desperately want in on Xiaomi's expected IPO, and talking up the company is a good way to endear themselves. Remember when that real estate agent told you your rundown two bedder was a treasure and guaranteed to fetch a good price? Yeah, it's like that.

Reuters reports that bankers see Xiaomi's earnings doubling to $2bn next year. To get there, Xiaomi would need to dramatically boost revenue and widen margins. That's hard to do simultaneously, especially in a weakening devices market. But such lofty estimates are helping these bankers talk up a $100bn share sale, when just two weeks ago the chatter was around a $50bn listing.</p>

Buying Xiaomi shares would be a sucker move. You can't honestly believe that it's going to make $100bn in its lifetime.
xiaomi  listing 
january 2018 by charlesarthur
How Spotify grew up before going public • Bloomberg View
Leonid Bershidsky:
<p>It's unconscionable in 2017 that the only publicly traded music streaming company is still Pandora Media Inc., an Internet radio provider which went public in 2011 and is trading below its initial public offering price. Hopefully, Spotify Ltd. will rectify the situation this year, even if that means it has to use a back door to an exchange listing. It's an interesting back door for others in the tech industry, too.</p>

Now then: Bershidsky's article is worth reading. But also, I messed up in my analysis of direct listing (what Spotify is doing). I thought it meant Spotify could sell shares. Not at all.

A reader who asked to remain unnamed explains:
<p>On a direct listing, Spotify doesn't sell any shares, either existing ones or new ones, (selling new shares is the only way to raise new equity for the company) so Spotify the company doesn't get any cash from this.

Basically the company rocks up to the exchange, fills in some paperwork, promises to comply with the exchange rules, and then hey presto people can enter buy and sell order for Spotify stock. It is then up to the EXISTING holders of Spotify stock to decide if they feel like filling any of the buy enters being entered (presumably yes, at a certain price, or why bother). Money that changes hands on those sales goes to those existing holders though, not to Spotify bank accounts

So no new money from a fresh equity issue also means no new money to pay off the [$1bn] debt. Of course the debt is convertible, and if the share price looks good enough, presumably the debt will be converted to equity and Spotify gets out from "under" the debt that way. It does stop the interest rate from ratcheting up though - and there seems to be some interesting calculations around what the conversion price is into equity, potentially a badly worded conversion clause that didnt take into account the possibility of a direct listing. Fxxing over the debt holders like that is probably half the attraction [of direct listing].

Plus once listed, you've done the price discovery process, and a secondary capital raising could be done somehow.</p>

Would very much like to know who came up with that smart idea of going for direct listing. Lawyer inside the company? Investment banker?
spotify  listing 
april 2017 by charlesarthur

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