<table><tr><th>From:</th><th>jeffrey E. &lt;jeevacation@gmail.com&gt;</th></tr><tr><td>Sent:</td><td>Wednesday, March 7, 2018 11:27 PM</td></tr><tr><td>To:</td><td>David Fiszel</td></tr><tr><td>Subject:</td><td>Fwd: BAML Sootily Cheat Sheet - UPDATE</td></tr></table>

what does this mean to us

jeevacation@gmail.com>

Richard Kahn

HBRK <u>Associates</u> Inc.

<https://maps.google= com/?q=575+Lexington+Avenue+4th+Floor+New+York,+NY+10022&entry=gma=l&source=g>
Avenue 4th Floor

<https://maps.google.co=/?q=575+Lexington+Avenue+4th+Floor+New+York,+NY+10022&entry=gmail&=mp;source=g>
New York, NY

<https://maps.google.com/?q=575+Lexington+Avenue+4th+Floor+New+York,+NY+10022&entry=gmail&am=;source=g> 10022

<https://maps.google.com/?q=3D575+Lexington+Avenue+4th+Floor+New+York,+NY+10022&entry=gmail&=ource=g>
tel: 
cell=:

Begin forwarded message:

From: "Ens, Amanda" &l=;amanda.ens@baml.=om <mailto:amanda.ens@baml.com>>

Subject= BAML Sootily Cheat Sheet - UPDATE
</=iv>

Date: March=7, 2018 at 2:09:53 PM EST

The image displays email header information:

*   **To:** "rkahn" (email address redacted)
*   **Reply-To:** "Ens, Amanda" (email address redacted)

=u>

Trading Commentary (Not a product of BAML Research and=should not viewed as a research report) <=span> S=otify: Stockholm-based music streaming service

## Timeline

	</=pan>March 15: Analyst Day (conf=rmed — Livestream) - Offi=ial Listing/Trading Date likely given

• <=pan style="font-size:10.5pt">Week of March 19 0: Company sponsored "Investor Education" =eetings & potential Research coverage launches by Sell Side<=u>

* =C2• Week of March 26 =Tentative): Trading Begins - Advisors wor= with Spotify to set initial trade price <=pan>* April 2 (Tenta=ive): Options Trade

## Financials - Fl filing

<https://www.sec.gov/Archives/edga=/data/1639920/000119312518063434/d494294df1.htm#rom494294_18> now publicly available

2017 Revs: $=B & Positive FCF $133M — 5-6x trailing revs certainly possible= implying $25B+ valuation (In our SOTP for Vivendi we ha=e music at 4x sales or €24bn) Ordinary Shares Outstanding:=/b> 176,976,280 reported as of 2/22/18 Valuation: At high end of rece=t trading, implies mkt cap $26B+ (very rough estimate). However, using cur=ent secondary market prices (- $125) implies a market cap of - $22B (very ro=gh estimate) o =C2 =AOClient conv=rsations point to a $20-228 valuation as being a level they might add</=>

https://www.sec.gov/Archives=edgar/data/1639920/000119312518063434/d494294df1.htm#rom494294_1=

Ind=stry Model: =A0Record Labels own New=Music & Back Catalog — Distribute thru Spotify & Apple Mus=c to Consumers — key question is how does Spotify gain control ove= supply?

## <=pan style="font-size:10.5pt">Bull/Bear Views

·     </=pan>Bull

=span style="font-size:10.5pt;font-family:'Courier New'">o<=pan style="font-style:normal;font-variant-caps:normal;font-weight:normal=font-size:7pt;line-height:normal;font-family:'Times New Roman'">=C2 Spoti=y becomes the Netflix of music by becoming a record label owning exclusive=content – not the case today and likely cash intensive</=>

o Spotify is an aggregator (not Netflix)= it's taking a commission on providing all music any time you want=— pushback likely would be then should be valued on gross profit m=ltiple

• =AO Bear =AO=/div>

o Cash burn / Potential dilution rises higher tha= expected as company pivots to become Netflix of music - paying up for per=ormer exclusivity (good) but likely results in higher than expected cash b=rn (bad)

o =C2 Typical consumer =odel is advertising — give service away for free and get 3rd<=sup> party advertisers to pay for access to users. Typical business mod=I is SaaS — subscription fee. Key for both is marginal cost =o add users is minimal.

Due to royalty agreements, marginal costs fo= Spotify grow with user growth limiting operating leverage from network ef=ect (similar to Lyft/Uber/Airbnb)

=C2* =span style="font-size:10.5pt">Competition=C2 — Apple Music — Record labels =A0

Index Implications

In order to be included in the S&P 5=0, a company must have been trading for at least 12 months following an IP= as well have positive earnings. As a result, we don't expect any =ndex implications for SPOT in the S&P 500 until these requirements are=met. However, it should be eligible for the S&P TMI and Completion ind=ces. We are still looking at implications for FTSE and MSCI based on domic=le.

<=pan style="font-size:10.5pt">Stock Loan Implications Given the=structure of the IPO, there may be a delay in shares settling INTO stock l=nding programs due to the DWAC process. (Delivery Withdrawal at Custodian)= This potential delay will more than likely affect the initial Locate Liqu=dity for a few days.

Happy to coordinate calls with John Egan, BAML=E2 s Short Analytics Specialist

Expe=ted Trading Dynamics

## <=pan style="font-size:10.5pt">Bull/Bear Views (cont.)

* =C2 Our understanding is that on the morning of trading, the=Floor Specialist will act like a stabilizing agent normally would (with ba=ks advising) to help match supply and demand

The opening is likely to be very d=layed as we will not know amount of shares to be bought/sold=/span>
=A0 The stock has a dece=t probability of trading up significantly on day 1 due to lack of pressure=from selling shareholders & inability to source a locate=/span>
<=u>

Historical Private Share Trading</=iv>

*

<=span>2017: $37.50 to $125

* *=A0 =/span>1/1/18 to 2/22=18: $90 to $132.50 (excl Tencent transaction)
Some confusion on s=are prices as secondary market prices are currently ~$5000=share. </=pan>Everything in prospectus reflects a 40-to-one share split (this in=ludes the beneficiary certificates that the founders own) <=u> Source:=span class="m_-2047515031755508950Apple-converted-space"> SEC.=ov <http://sec.gov/> , F-1 filing - https://www.sec.gov/Archives/edgar/da=a/1639920/000119312518063434/d494294df1.htm#rom494294_18</=pan> <https://www.sec.gov/Archives/edgar/dat=/1639920/000119312518063434/d494294df1.htm#rom494294_18> <=div>

<=pan style="font-size:10.5pt;font-family:Symbol">· =C2 No deal roadshow, No underwriters
· No fixed # of securities for sale<=>>

- No fixed # of securities for sale<=>

* =C2 No lork-ups except Tencent Music Entertainment & Tencent (holding for at lea=t 3 yrs from 12/15/17), who own -7.5%

* <=pan style="font-size:10.5pt">Majority Ownership by Founders - Daniel Elk=controls 37.3% of shares and Martin Lorentzon controls 43.1% of the vote. =oth founders control 21% of the ordinary shares outstanding<=span>

* *=A0 There is language ab=ut beneficiary shares that may be issued to founders on top of shares, but=would be dilutive and likely to maintain control if/when company does futu=e capital-raising Source: SEC.gov <http://sec.gov/> , F-1 filing - https://wrw.sec.gov/Archives/edgar/data/1639920/000119312518063434/d494294=fl.htm#rom494294_18

## =C2

Have received a lot o= requests for conference calls & happy to organize calls for those int=rested. =AO

Thanks,

Alli, Alkesh & Mike

Trading Commentary (Not a product of BAML Research and should not viewed as a re=arch report) This material was prepared=by Trading personnel of Merrill Lynch and is subject to the terms availabl= at the following link: http://corp.bankofamerica.com/business/smb/landing/emaildi=claimer/americas/global-markets <http://corp.bankofamerica.com/business/smb/lan=ing/emaildisclaimer/americas/global-markets>

=u>

This material =as prepared by Cash Equity Trading of Merrill Lynch, Pierce, Fenner & =mith, Incorporated ("ML"). The material is not a publication of =ofA Merrill Lynch Global Research, and it has not been reviewed or approve= by BofA Merrill Lynch Global Research. Any summary of ML Research notes a=d reports, and/or any reference or link to BofA Merrill Lynch Global Resea=ch notes and reports, are qualified in their entirety by the views of BofA=Merrill Lynch Global Research. Any reference to or summary of ML Research =n this material is qualified in its entirety by the views of BofA Merrill =ynch Global Research. Please refer to BofA Merrill Lynch Global Research f=r more details (baml.com/markets <http://www.baml.com/markets> ).<=span>

The estimated values pro=ided in the material are "as of" the date indicated and do not r=present actual bids or offers by ML. Even though the material is based upo= publicly available information and news sources that are generally believ=d to be reliable, there can be no assurance that actual trades could be co=pleted at such value(s). Because these estimated valuations are based on u=derlying valuations obtained from third party sources we cannot make any

## =C2 (cont.)

r=presentation as to the accuracy or completeness of the valuations. The mat=rial is not intended to be a comprehensive summary of all material news, i=formation, events and risks relating to the companies or securities mentio=ed. ML does not make any representation or warranty as to the accuracy or =ompleteness of this material, and, by accepting the material, you agree th=t ML shall not be responsible for any error or omission. References to pas= prices or quotes do not in any way imply that such prices or quotes will =gain be available or actionable. These estimates may not be representative=of any theoretical or actual internal valuations employed by us for our ow= purposes, may vary during the course of any particular day and may vary s=gnificantly from the estimates or quotations that would be given by anothe= dealer.

This material does not constitute an offer, or a solicitation of an o=fer, to purchase or sell any security or financial instrument, nor does th= material constitute advice or an expression of ML's view as to whethe= a particular security or financial instrument is appropriate for you and =eets your financial objectives. ML will not be liable for any investment d=cision based in whole or in part on the material. The reader is required t= make its own investment decisions, using as necessary the advice of indep=ndent advisors or consultants. As a condition for providing these estimate=, you agree that Merrill Lynch makes no representation and shall have no l=ability in any way arising there from to you or any other entity for any l=ss or damage, direct or indirect, arising from the use of this information= ML and its affiliates may trade for their own accounts as market maker, b=ock positioner, dealer, specialist, arbitrageur or speculator in any of th= securities of issuers mentioned in this material. When trading for propri=tary accounts, ML and its affiliates may consider the material in their tr=ding decisions, as appropriate. Principal transactions by ML and its affil=ates are effected in accordance with applicable rules and regulations, and=such transactions may affect the prices of the securities mentioned. Furth=r, ML and its affiliates may from time-to-time perform investment banking =r other services for, or solicit investment banking or other business from= any company mentioned in the material. This material may not be distribut=d outside the United States; and is intended solely for Global Markets ins=itutional clients. The material is provided for informational purposes onl= and any distribution or copying of the material is prohibited4=>

<span style="font-size:9pt;font-family:Tahoma,sans-serif;color:navy" lang=3D"EN-GB">Allison Wile Director | US Ca=h Equities Trading | New York, NY 10036 Merrill Lyn=h, Pierce, Fenner & Smith Incorporated Direct | =M: <mailto:

This message, and any attachments, is =or the intended recipient(s) only, may contain information that is privile=ed, confidential and/or proprietary and subject to important terms and con=itions available at http://www.bankofamerica.=om/emaildisclaimer <http://www.bankofamerica.com/emaildisclaimer> . If you are not the intended recipient, please dele=e this message.

</=r>

<http://rsch-bems-tr.baml.com/q/MzOu=YLogZAlLelaNgcWvQ~~/AAAAAQAY/RgRcgr3-PkEIAG1D2cCAiitCCgAB_jigWhNSKIVSGHJrY=huQGhicmthc3NvY2lhdGVzLmNvbQlRBA AAAABHmXsidGVtcGxhdGUlOiJkZWZhdWx0X3RibXBs=XRlliwbmFtZSI6ljAzMDcxNDA5NDUzMjg4MzE6MjYxMjk5Ni1ITkEwliwiY2xpZW50X2lkjo=NS0wMzA3MTQwOTQ1Mzl4ODMxOjl2MTI5OTYtSE5BMCIslmF1dGhvcBlbWFpbCI6ImFkbWluQG= vbGRzcgFyay5jb20ifQ~~>2612=96 =img name="m_2047515031755508950_image002.png" style="font-family: Cali=ri, Arial; font-size: 14.666666984558105px; font-style: normal; font-variant-cap=: normal; font-weight: normal; letter-spacing: normal; text-align: start; text-ind=nt: 0px; text-transform: none; white-space: normal; word-spacing: 0px" id="m_2=475150317555089505ABA4A7D-698B-4F56-B647-80CB51A6551B" src="cid:10160276=5">

4

## =C2 (cont.)

=br>--

## please note

The information contained in this communication is confidential, =ay be attorney-client privileged, may constitute inside information, an= is intended only for the use of the addressee. It is the property ollEE Unauthorized use, disclosure or copying of this communication o= any part thereof is strictly prohibited and may be unlawful. If you ha=e received this communication in error, please notify us immediately by=br>return e-mail or by e-mail to jeevacation@gmail.com <mailto:jeevacation@gmail.com> , and destroy this communicat=on and all copies thereof, including all attachments. copyright -all ri=hts reserved