Spotify to Direct List on Tuesday; Begin Publicly Trading as SPOT
In the last few months, there’s been no shortage of excitement on Wall Street. However, on Tuesday it’s going to get a little more exciting as audio streaming company Spotify rings the opening bell at the New York Stock Exchange.
Spotify’s direct listing has been the centerpiece of discussion for both the finance world and the music industry ever since they released their F-1 filing with the SEC earlier last month. Since then, countless pundits and journalists have pored over Spotify’s nearly 250 page report which has every piece of information imaginable: subscriber count, development plans, shareholder information, you name it. Of course, all this information has been used to help financial journalists and analysts extrapolate whether or not the streaming company’s stock will float or sink when it begins trading.
Ringing the Bell
When Spotify goes public on Tuesday, they will not be doing an initial public offering (IPO) like most companies traditionally do. Instead, Spotify will be executing a direct listing of their stock. What this means is that Spotify is providing an opportunity for private investors—who already hold Spotify stock—to sell their stock, while allowing the public to invest in Spotify. The biggest advantage of this is that Spotify saves a tremendous sum of money because they don’t have to use an intermediary like a bank or financial company to cover the excessive costs and fees associated with an IPO.
Spotify’s share price will also be “discovered” on Tuesday morning, but it is anticipated that each share of SPOT will trade within the range of $120.00 and $125.00. The actual price at which the share opens at or trades throughout the day is decided wholly based on market conditions, however, so an exact price per share won’t be established until the shares start exchanging.
From what coverage we’ve seen, analysts appear to be echoing positive sentiment on Spotify. The vast majority of analysts have indicated that they think the significant operating losses that Spotify has endured over the last few years will soon be erased as their market and profit grows. Spotify’s 80 million subscribers and sizable edge over competitors like Google Play and Apple Music have also energized prospective investors.
Some analysts and firms have already marked coverage of SPOT stock with a buy rating and some have even gone so far as to set price targets as high as $220.00. It would be wise, however, to take estimates and projections with a grain of salt. While Spotify might open with tremendous energy, it is also likely that Spotify’s stock price might face headwinds later in the day should the market fall as it has over the last few days.
How Can I Buy Spotify (SPOT) Stock?
A lot of artists and members of industry have asked how they can get involved in the direct listing and invest in Spotify when it goes public. In order to get involved, you’ll need to have an account with a brokerage firm like Vanguard. However, if you’re looking for a brokerage and don’t have a personal finance advisor already, you might consider using an online broker like Robinhood which has commission-free trading (you can register for Robinhood and get a free stock by using our referral code). With any investment comes risks however, so be considerate of those risks before investing.
What Does Spotify’s Direct Listing Mean for Me?
It probably doesn’t mean a whole lot to any one artist or listener specifically—unless, of course, you’re looking to invest in the direct listing—but it might make a difference to the music industry at large. Associate editor Kian Moretz analyzes what he thinks the Spotify direct listing means for the industry at large in his opinion article.
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