Tune in to the spotify_logo IPO

The extended equity bull market has fueled investor hype in Spotify’s IPO as it began trading on April 3rd. We now have Spotify available as a CFD.

KEY FACT ONE

159 million active users
(29% growth in 2017)

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KEY FACT TWO

71 million premium subscribers (47% growth in 2017 and around twice the number of Apple Music)

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KEY FACT THREE

Revenues of €4.09 billion in 2017

KEY FACT FOUR

Spotify operates in 65 countries, with the US, Brazil, the UK and Sweden being their largest markets

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What is Spotify?

Between 1999 and 2008, revenue in the music industry plunged by 29% as people began to stop paying for music, even though they still consumed it. Only in the last three years have we witnessed a growth in industry sales, mainly thanks to paid streaming services such as Spotify.

Spotify played an instrumental role in creating a positive outlook for the music industry, and the company now has almost double the number of premium subscribers as their closest competitor, Apple Music.

Spotify’s business model is access based, allowing users to stream music across different devices. Their free service is supported by advertising, while their premium service is based on paid monthly or annual subscriptions. This sets Spotify apart from their main rival Apple Music, who use a transaction-based system, where the user purchases and owns the music.


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The Spotify IPO

Spotify filed to go public on the New York Stock Exchange (NYSE) under the ticker name SPOT in late February 2018. They are targeting a $1 billion IPO in a direct public offering (DPO). This involves transferring shares from existing shareholders like employees and owners to stock market investors. In a DPO, no new shares are issued and a bank does not need to underwrite the offering.

How are Investors Feeling?

Investors are cautious about the impending IPO after Snapchat (SNAP)’s disappointing launch last year. As such, investors are asking whether Spotify will ever turn profitable and justify the near $20 billion valuation that private trades in its shares put on it.

Spotify’s listing is likely to act as a barometer for Airbnb and Uber, who are deciding whether to stay private or go public after SNAP’s underwhelming performance. However, Spotify’s market dominance in the technology sector means that it’s likely to restore faith in technology IPOs, particularly due to its massive global subscriber base and new user growth.

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What Can We Expect from the IPO??

With palpable anticipation and growing demand, Spotify is ready for take-off. However, it could come with too much vapour or too much fluff. With no major bank underwriting the offering, this could bring additional volatility to Spotify’s shares in its early days on the market.

As a result, shares will probably trade in a pretty wide range once they are available to a broader investor base and big first-day growth wouldn’t be beyond the realms of possibility. A calculated approach will be required, although you will need to have faith in your investment.

Trade Spotify CFDs with ADS Securities

We will have Spotify available as a CFD on our platforms as soon as trading starts on the exchange. Take a look at our trading accounts and platforms to find the option most suited to your trading needs.

Ready to start trading?

Opening an account with ADS Securities is simple and secure. You have the option to open a live account via our secure client portal or try our FREE Demo Account.