In its direct listing, Spotify shares began trading on the New York Stock Exchange on April 3 with no road show, no raising of new capital, no bell-ringing ceremony for top management, no bragging about the massive first-day pop, and no breathlessly waiting for the stock to plunge after insiders are freed to sell their shares six months after the IPO.
Is this the end of the IPO business for Wall Street Not at all, but it will cut into how much money bankers can charge for IPOs of companies like Spotify, Uber and Airbnb with a large base of loyal consumers who may not need to raise much capital in their IPOs. That's because such companies have already created demand for their shares by building a popular consumer service.
For brokerages that offer fractional shares, you can purchase just a tiny piece if you don't have enough money for a full share. This allows you to still be able to invest in Spotify even if you only have $10 to invest.
It's also smart to invest in stocks in different sectors. Spotify is in the Communication Services sector, which may experience more volatility. To spread out risk, also buy shares of stocks in other sectors like Financial, Healthcare, Technology, etc.
RobinhoodRobinhood is one of the most popular investment apps for beginners. It has no minimum to get started. A big benefit is that it supports fractional shares, allowing you to invest in stocks with as little as just $1.
M1 FinanceM1 Finance is a unique hybrid DIY brokerage and robo-advisor. You choose your own stocks and build your own portfolio. Then M1 will automatically manage it for you at no cost. It also supports fractional shares. The minimum to start is $100.
Stash InvestStash Invest is designed for new investors who need a little handholding. It guides you to pick stocks aligned with your goals and risk tolerance, but you can also choose your own stocks. You can purchase fractional shares. There is a monthly fee starting at $3/mo.
WebullWebull also has no trading fees or minimum investment. It offers better research tools and analytics for more experienced investors. It's also a good choice for active traders with free extended trading hours. However, it doesn't support fractional shares.
FidelityFidelity is a great choice if you're looking for a full-service brokerage with a wide variety of account types and other investment products. There is no account minimum. Fidelity also offers fractional shares from as little as $1.
The Merlin news also comes two weeks after we learned that Sony banked 50% of its shares in Spotify for around $750m, and seven days after we reported that Warner had banked 75% of its shares for approximately $400m.
Spotify Technology S.A. went public on April 3, 2018 through a direct listing of its shares on the New York Stock Exchange.
Spotify wanted to provide all buyers and sellers of its shares with unfettered access to the markets. The traditional IPO process includes a limited set of participants: a company and possibly certain existing shareholders who are offering to resell their shares in the IPO; an underwriting syndicate of investment banks that builds an order book of indications of interest from investors; and the investors who receive the initial allocation of shares being offered in the IPO at the price to the public appearing on the front page of the prospectus. Institutional buyers tend to feature prominently in the initial allocation. In the Spotify direct listing, no fixed number of shares was being sold to the public and no allocations were available at a set public offering price; rather, any prospective purchasers of shares could place orders with their broker of choice, at whatever price they believed was appropriate and that order would be part of the price-setting process on the NYSE. This open access feature and the ability of virtually all existing holders to sell their shares, and of any investor to buy their shares, created a powerful market-driven dynamic for the opening of trading.
Spotify wanted to enable market-driven price discovery by providing increased transparency. To accomplish this, Spotify provided traditional public company-style guidance prior to listing. On March 26, 2018, a week before trading in its shares commenced, Spotify issued guidance to the market consistent in scope of an already public company with its financial outlook for the first quarter and full year 2018.
In an IPO, effectiveness would mark the end of the road show process and would mean that the offering was ready to price and begin trading the following morning. Spotify chose a different path, deciding to hold the first day of trading more than a week later, on April 3, 2018. Why such a gap First, once Spotify was subject to the reporting requirements of the Exchange Act, it wanted to further its goal of transparency by issuing standard public company-style guidance to the market with its financial outlook for the first quarter and full year 2018 and then to allow this information to season with investors before listing and the beginning of trading. Second, in order to achieve its goals of liquidity for existing shareholders and equal access to all buyers and sellers, Spotify wanted to ensure that existing shareholders had sufficient time to deposit their shares through the Depository Trust Company (DTC) into a brokerage account prior to the first day of trading, if they wished to do so. Consequently, existing shareholders would be able to potentially trade the shares starting from the moment of the opening bell. Much of the work required to effect such deposits needed to occur after the effectiveness of the registration statement.
With that prediction in mind, let\\u2019s look at what\\u2019s happened since Spotify\\u2019s listing on the stock exchange. As you can see, the shares hit their peak price at precisely 24-36 months after the IPO\\u2014but since that time have collapsed a staggering 70%. The shares are now trading below the original offering price. By comparison, US stocks as a whole are up almost 40% over that same period.
This may be a surprise to some people, but clearly a lot of large shareholders had a hunch that this decline was coming. At the time of the public offering, several large record labels were shareholders of Spotify\\u2014but (surprise!) Sony and Warner Music soon dumped most of their shares. Universal Music continues as a shareholder and still owns around 4% of Spotify, but clearly should have sold before the 70% collapse.
WOODS: The investment banks in charge of the IPO will gather together big investors. So the people who run mutual funds or wealthy private investors, those people are the ones who will buy all the new shares, often with the intention of selling them again the next morning to the public at large at an almost guaranteed profit. Now, a little bit of a pop, like a slight rise in the share price on the day of the launch is widely seen as a good thing. But the amount that share prices sometimes rise on the first day of an IPO goes way beyond that. Take LinkedIn. Its share price more than doubled on the first day, hundreds of millions of dollars the company missed out on. One person closely watching LinkedIn's IPO was Barry McCarthy.
WOODS: Direct listing, that means just allowing your existing private shares to be traded on the stock market. But you skip over that step of issuing all those new shares to insiders the night before. So Barry gets a direct listing ready. Then it's the morning of the IPO, April 2018. Spotify has estimated what it's called a reference price at $132. The first share is traded for $165.90. This is way above expectations. People on the trading floor applaud, they shake hands. And by the end of the day, 30 million shares are exchanged, and it closes at $149. The direct listing was a success. Several other companies have followed Spotify's model, companies like Slack and Palantir. But as for that pop, those huge gains on the first day of trading from share prices that are sold too low Well, that remains the case for a lot of companies. But at least companies going public now have a choice. Darian Woods, NPR News.
Rowan Street Capital discussed stocks like Spotify Technology S.A. (NYSE:SPOT) in the August update letter. Headquartered in Luxembourg, Luxembourg, Spotify Technology S.A. (NYSE:SPOT) provides audio streaming services. On October 10, 2022, Spotify Technology S.A. (NYSE:SPOT) stock closed at $85.97 per share. One-month return of Spotify Technology S.A. (NYSE:SPOT) was -15.68% and its shares lost 63.46% of their value over the last 52 weeks. Spotify Technology S.A. (NYSE:SPOT) has a market capitalization of $16.563 billion.
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Famed stock picker Cathie Wood's Ark Invest ditched Spotify shares last week as the audio-streaming service faced a row over its Joe Rogan podcast, with high-profile artists asking to pull their songs from the platform.
Spotify has historically been one of Wood's favorite holdings. But Ark shed part of its stake in the company on Friday, when its Innovation ETF and the Next Generation Internet ETF sold more than 84,000 shares worth $14.5 million.
Ark's moves came as Spotify's shares slumped 12%, after musicians Joni Mitchell and Neil Young asked the company to remove their music from its platform. Critics say the Spotify-owned \"The Joe Rogan Experience\" has helped to spread COVID-19 misinformation.
Spotify was last up 10% at $190.26 a share in regular trading on Monday, down more than 18% for the year so far. Ahead of Monday's session, its shares were down 26% so far this year, partly due to tech stocks being sensitive to rising interest rates. 59ce067264