French Spotify rival Deezer drops 35% when it enters the market

The logo of French music streaming platform Deezer is seen ahead of the opening ceremony of the company’s initial public offering (IPO) on the Euronext stock exchange in the business and financial district of La Défense in Courbevoie near Paris, France , July 5, 2022. REUTERS/ Benoît Tessier

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  • Company shares fall 25%
  • French FinMin calls Deezer’s debut a “success”
  • Deezer lacks the financial firepower of bigger rivals

PARIS, July 5 (Reuters) – Shares of French music streaming platform Deezer plunged as much as 35% on its first day of trading, in a blow to telecoms maverick Xavier Niel and billionaire luxury François-Henri Pinault, which made their market debut. possible.

Deezer, one of the country’s first so-called “unicorns,” or billion-plus tech companies, is struggling to convince of its ability to take on bigger rivals Spotify (SPOT.N ) and Apple Music (AAPL.O).

“The sector is super competitive,” said Manuel Muehl, an analyst at DZ Bank. “There are several services – Amazon Prime, Apple Music, etc. – that are run by large US companies with very deep pockets.”

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“(They) can subsidize their business with other sources of revenue, and therefore they are not dependent on the success of their music platforms unlike ‘pure play’ businesses.”

Deezer was down 24% at 11:49 GMT at 6.52 euros per share, after opening at 8.50 euros. It had previously sunk up to 35%.

“There is a question about their ability to grow and generate profits,” an industry source said.

Deezer’s IPO was made possible by its merger with a blank check company, I2PO, notably backed by French banker Matthieu Pigasse, Niel and Artemis, the Pinault family holding company that controls the owner of Gucci, Kering (PRTP.PA).

Deezer announced its IPO in Paris in April in a deal valuing the company at just over one billion euros ($1 billion).

Services like Deezer and its rivals represent a shift in the music industry from buying and downloading tracks to listening to songs stored remotely online.

Founded in 2007, just a year after Spotify, Deezer has been considering going public for years. It postponed previous plans to go public in 2015 due to market conditions.

The fall in shares did not prevent the French Minister of Finance, Bruno Le Maire, who attended the ceremony marking the IPO of Deezer, to congratulate Deezer on its IPO.

“The IPO of @DeezerFR is not only an economic and technological success, but it is also a cultural success”, tweeted Le Maire. “Defending Deezer is defending our culture… our musical heritage.”

($1 = 0.9600 euros)

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Reporting by Dominique Vidalon, Clément Martinot, Ingrid Melander; Editing by Jan Harvey and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

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