Deezer ‘Set For German Expansion’ After IPO Slump

Music streaming platform Deezer is reportedly planning to begin its expansion into Germany in the next few weeks using a partnership with Luxembourg-based media conglomerate RTL to give it a foothold in the country.

Deezer is using the funds it raised from an IPO last month to back the move and is hoping to replicate a strategy that has proven successful in France and Brazil, chief executive Jeronimo Folgueira told Reuters.

Folgueira said Deezer would next launch in Germany inside of the RTL+ app “in the next few weeks”, which he said would give the company “very strong entry” into the German market.

“We expect Germany to become the growth driver of the company for the next few years on the back of that,” he said. “We are looking to replicate that successful French and Brazilian model.”

IPO slump

In early July Deezer made its long-delayed market debut in Paris and saw its shares drop as much as 59 percent in the first day of trading amidst broader investor skepticism of loss-making tech firms.

It later pared those losses and the company’s shares are currently trading at around 23 percent below their IPO price of 8.50 euros.

The company said at the time of its IPO that it planned to use funds from the flotation to increase its turnover to 1bn euros by 2025 and to return to operating profitability. Deezer’s losses last year reached 123m euros on a turnover of 400m euros.

The service is one of France’s first “unicorns” with an IPO valuation of 1.05 billion euros (£890m).

‘Strong’ business

Folgueira told Reuters the fact that the company was able to float and raise 143m euros under current conditions “shows the strength of our business and industry”.

He said the flotation created liquidity for some of its investors and opened the way for  “potential M&A down the road”, adding that the company would eventually consider expansion into markets such as the US and the UK.

“If we can steal market share and compete with Spotify, Apple, Amazon in France and in Brazil, there’s no reason we cannot do that anywhere else in the world,” he said.

Deezer had 9.6 million subscribers at the end of last year, well below Spotify’s 180 million premium subscribers at the time. Some 72 percent of its subscribers are concentrated in Brazil and France.

Investor jitters

Spotify is currently trading at around $118, not far from its record low of $89.03 in May and well below its nearly $400 share price of early 2021 after it reached an exclusive podcast deal with comedian and UFC commentator Joe Rogan.

Its shares are about 52 percent down so far this year, while Arabic streaming service Anghami is trading down about 69 percent this year and Tencent Music is down about 38 percent.