Sonos sees modest gains on first day of trading

Sonos opened its first day of trading at $15 a share though quickly gained 20% as trading began. As of publication, Sonos, trading under SONO, is around $18.50 a share.

Sonos priced its initial shares at $15 a share, below the expected range of $17 to $19. At this price Sonos is valued at just under $1.5 billion and will raise $208.5 million by going public. If the stock price maintains its current levels, Sonos will end its first day of trading up and in the expected range. Pricing their initial shares under the expected range resulted in the company raising as much money, but it also provided a bit of cushion in case Wall Street traders disagreed with the pricing. It’s never a good look to end a company’s first day of trading in the red.

Sonos’ Michael Groeninger, VP of Corporate Finance, tells me the company priced its IPO price under the expected range in response to recent market movement. As examples he pointed to the volatile market environment caused by multiple down days including Facebook’s big drop in stock price. Sonos, Giannetto said, is more concerned about where the stock price is in three to five years rather than on the first day of trading.

To celebrate its Nasdaq listing, Sonos updated the sound of the Nasdaq bell where it will be used going forward to open and close the day’s trading.

Sonos is nicely positioned as a third-party option in an ecosystem that’s getting increasingly crowded by proprietary speakers from the larger companies that own voice assistants like the Echo, HomePod and Google Home. But Sonos has been around for a considerable amount of time and has clearly built up a significant following to ensure that it could find itself operating as an independent public company. In its fiscal 2017 year, Sonos said it brought in nearly $1 billion in revenue, an increase of 10 percent year-over-year. The initial filing indicated that the company had sold a total of 19 million products in 6.9 million households, with customers listening to 70 hours of content each month.

I spoke briefly with long-time Sonos employee Nick Millington who is now the company’s Chief Product Office. He sees Sonos as a unique offering in today’s consumer market. He explained that the company’s three pillars of focus — openness, quality, and cohesive product family (he called it systemness) — is what makes Sonos unique. He pointed out that because of those three areas of focus, 90% of the products Sonos ever sold are still in operation today. Sonos’ biggest competitor isn’t speakers from Amazon or Apple, but rather a silent home, he said. Because the company has long worked with outside services, it is committed to brining Alexa, Siri and Google Assistant to its products.

Still, it’s hard to ignore the facing increasing competition from the electronic giants of Apple, Google and Amazon — all which want a spot for their own speaker in people’s homes. Sonos responded by building-in Amazon’s Alexa personal assistant into several products. Its most recent product, the $399 Beam sound bar, has Alexa built-in and lets users ask Apple’s Siri to control music on Sonos systems. Google Assistant compatibility is expected to come later this year.