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Deezer arrives on Paris stock exchange, share price slumps

By | Published on Wednesday 6 July 2022


Deezer formally arrived on the Euronext stock exchange in Paris yesterday following its merger with the special purpose acquisition company I2PO, creating so much excitement that its share price at one point slumped by 35%. Party time!

The French streaming firm announced its plan to become a publicly listed company via the I2PO merger back in April. For its part, I2PO raised monies on the Paris stock exchange last year with the stated intent that it would use that cash for acquisitions in the entertainment sector.

With that transaction and stock market listing now complete, Deezer said yesterday that it “intends to continue to grow, directing its efforts towards large attractive markets through its partnership-first strategy and focusing on product innovation and brand differentiation as the home of music, connecting fans and artists around the world”.

The digital music business also reminded investors that this transaction brings 143 million euros of new money to the company, which includes cash held by I2PO plus further monies raised via a ‘private investment in public equity’ scheme, which was supported by many of the firm’s previous investors.

Talking of which, Deezer’s new investor relations site also sets out the approximate stock holdings of its biggest shareholders. Access Industries – which also controls Warner Music of course – remains the biggest shareholder with a 38.06% stake. Which is considerably bigger than the stake owned by the next biggest shareholder, Orange, an early investor in Deezer, which now controls 8.13% of the company.

Bigging up the future of the new publicly listed Deezer, CEO Jeronimo Folgueira said: “Deezer’s IPO on Euronext Paris is a milestone in the company’s history. We are now taking the first steps on a new and exciting journey to develop, expand and capture an even bigger part of the growing music streaming market”.

“Through merging with I2PO and going public, we have created a solid foundation to execute our strategic plan, with the right capital, expertise and network”, he added. “With a highly competitive product, a clear strategy, and a renewed and experienced management team, we will make the most of this opportunity to create substantial shareholder value. We are honoured to join the Euronext Tech Leaders segment and to be ranked among the greatest tech companies in Europe”.

So that’s all exciting. But does the investment community share Folgueira’s optimism? Well, the first day’s trading of the streaming firm’s shares would suggest not really. Deezer’s share price ended the day 29.4% down on its price at the point of listing, having been 35.1% down at one point.

It’s no secret that some in the investment world are concerned about the likely future performance of subscription streaming services in an increasingly competitive marketplace, with the COVID-caused surge in home entertainment now over, and wider economic turmoil likely to result in at least some consumers seeking to cut their entertainment costs, while advertising budgets could also slide.

Spotify has been trying very hard of late to convince investors that things aren’t as bad as some analysts reckon, particularly with audio streaming as compared to video streaming, but its share price is yet to recover from a year of decline. And Spotify, of course, is much, much bigger in terms of users and revenues than Deezer in a business where the model really needs significant scale to work.

All of which means that a summer 2022 stock market listing for Deezer was always going to be tricky. But whatever happens next, now that it has a share price to monitor and quarterly financial reports to scrutinise, both investors and the music industry will be watching the progression of Deezer much more closely in the years ahead.