Spotify’s (SPOT) shares made their unusual debut to public trading on the New York Stock Exchange on Apr. 3, in a listing that comes with several risks, and possible rewards, for the music streaming company. The stock opened at $165.90/sh at 12:45 pm EDT, and closed at $149.01/sh, over 11% down from the first trade, but 13% higher than the $132/sh reference price. 

Spotify's first trading day. Times are UTC. Chart made with Tradingview.

Spotify's direct initial public offering (IPO) involved selling stock under the ticker SPOT directly to investors, instead of going through an underwriter. That means that if the stock plunges, there is no big bank to prop up the share price with more share purchases. Essentially, a direct IPO is likely to increase volatility on the first trading day. (See also: Can Apple, Amazon, Pandora Compete with Spotify?)

In a dramatic twist, Spotify executives were conspicuously absent at the opening bell the morning of the IPO, per reports. Then, there was the NYSE's embarrassing move of flying the Swiss flag rather than the flag of Sweden, Spotify's country of origin: 

Extremt mycket lol på Wall Street när NYSE hissar en schweizisk flagga. $SPOT #sthlmtech pic.twitter.com/snA6P1i7OX
— Sven Carlsson (@svenaxel_) April 3, 2018

Direct listings are typically used for smaller launches, such as for a company emerging from bankruptcy or a public company’s spinoff listing shares.

Spotify's Timing

Aside from the usual risks associated with direct IPOs, Spotify faces challenges in the broader technology market, if big tech stocks are any indicator. Shares of large technology companies like Facebook (FB) and Amazon (AMZN) have seen volatile trading in recent weeks.

Facebook’s valuation plunged $90 billion on privacy concerns and Amazon stock is struggling in the wake of criticism from President Donald Trump about policies regarding its taxation. Even shares of Netflix (NFLX), which like Spotify depends on a subscription model, are struggling, having slid 5% Monday. (See also: Facebook Looks to Grow Washington Lobbying Army.)

Spotify said it opted for a direct IPO because its first priority is not to raise funds. Instead, it wants to create a level playing field for small investors and large investors, which often provide early allocations to their favored clients. Spotify is also saving tens of millions of dollars by avoiding an underwriter, although it has tapped Goldman Sachs (GS), Morgan Stanley (MS) and Allen & Co. to advise.

Some analysts, however, are highly optimistic about Spotify's future prospects, comparing it to Netflix in that both these companies offer quality, sought-after content. Atlantic Equities analyst James Cordwell told CNBC: "Spotify faces stiff competition, but we believe its richer music data and singular focus will enable it to offer the best service in terms of music discovery — the key competitive differentiator."