Shares in French music streaming service Deezer did not hit the right note with investors at Tuesday’s launch on the Paris Stock Exchange, falling more than 35 percent in morning trade.
The steep drop — to as low as €5.52 ($5.70) before a slight rebound — was a blow to the Spotify competitor, whose 9.6 million subscribers make up about two percent of the global streaming market, according to Midia Research.
That makes it a minnow compared to the Swedish streaming giant, which boasts a market share of around 31 percent.
But as one of the few French digital companies to become a household name, Deezer’s IPO in Paris was attended by Economy Minister Bruno Le Maire, who told bosses “You need to grow” after CEO Jeronimo Folgueira rang the opening bell.
“I don’t accept that all American companies come to Europe without European companies going to the US to explain to our American friends that European companies are the best,” Le Maire said.
Besides Spotify, Deezer has yet to catch up with other giants in the streaming world, including Apple, Amazon and China’s Tencent.
The company is focused on music rather than expanding into neighboring areas like podcasting and audiobooks like Spotify and Amazon have done.
Deezer hopes deals with mobile network operators like France’s Orange and Brazil’s Tim, as well as broadcaster RTL in Germany, will help reach more listeners in a global streaming market that’s growing by more than 25 percent per year by users.
“We know that with the right distribution, we can gain market share and become rivals to the big players,” CEO Folgueira told AFP before the IPO.
Compared to 2015, when an initial attempt to take the company public had to be postponed due to adverse market conditions, “the business has changed, the market has changed: it is the right moment to take this step”, he added.
“Music streaming is really mainstream, it accounts for almost two-thirds of recorded music revenue, which wasn’t true at the time.”
Deezer’s biggest investor prior to its launch was British-American billionaire Len Blavatnik with 43 percent, while French businessmen including billionaire Francois Pinault have also bet on the company.
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