Spotify’s non-traditional ‘direct offering’ was once lauded as genius. Now, it’s complicated.

Spotify’s ‘non-IPO IPO’ bucked one of Wall Street’s most cherished traditions, and minted billionaires overnight.  And as Spotify’s shares soared towards $200, naysayers in the financial sector started to look a little stodgy.

Meanwhile, scores of other companies started cooking up their own Spotify-like Wall Street offerings, with traditional underwriters and banks quickly starting to adapt.

But maybe that was a bit premature.

Now, as Spotify’s stock threatens to sink below $100, a sobering rethink may be in order.  Especially for those holding the bag on fast-sinking shares.

In Friday trading, Spotify shares took another bath.  Buy the bell, SPOT shares finished at $106.84 after scraping another all-time low of $104.60.

That represents a near-50% drop from July peaks, and a wipeout of nearly $17 billion in market cap.  The figure is almost unimaginable, especially in such a short period of time.

The declines are also outpacing declines in broader market indices, including the S&P 500 and Dow Jones Industrial Average (DJIA).

Of course, it’s hard to call Spotify’s offering a failure, especially with SPOT’s market cap still valued at $19 billion.  And for anyone cashing out near the top — including Warner Music Group and Sony Music Entertainment — this is the stuff of genius.

Also not complaining: Spotify executives who cashed out their coveted shares, especially those with low strike prices.

And let’s not forget that what goes down can quickly go back up.  Bottom-feeders are already surrounding Spotify, and shares could recover in 2019 if greed replaces fear.

Spotify shares land at $106.84 on Friday, December 21st, after scraping $104.06, another all-time low.

Spotify shares land at $106.84 on Friday, December 21st, after scraping $104.06, another all-time low.

But where’s the bottom, exactly?

That’s an increasingly tricky question, with Spotify getting smacked by some serious market headwinds.  That includes the distinct possibility of a protracted U.S. government shutdown, with President Trump threatening to veto any spending bill that doesn’t include $5 billion in border wall funding.

Meanwhile, a nasty mix of rising interest rates, sinking fortunes overseas, and looming trade battles is putting a damper on once-bullish Spotify enthusiasm.  It also appears to be focusing investors around actual financial fundamentals, instead of broader long-term enthusiasm.

On that note: Spotify did report a profit during the last quarter, but that was a technicality based on the company’s holdings of Tencent Music Entertainment.  Just recently, Tencent spun its streaming music property public, but the results have been lackluster — and sinking TME shares could have a damaging impact on Spotify’s future financial quarters.