IPO’s are nothing new to the market. At the end of the day, companies go public all the time. Some of them fly out of the gates, some of them fall dramatically, and others stay relatively flat. However, when it comes to spotify in particular, this thing is likely to soar.

Sure, the company is a strong company, and there’s definitely value here. However, that’s not the primary reason that the Spotify stock price is likely to rocket on the launch of the IPO. The big reason has to do with the unique aspects of the shares that will become available when the IPO goes public. Today, we’ll talk about what’s so unique about the shares that will be sold during the Spotify IPO, why this unique aspect will likely lead to a big spike in value right out of the gate, and what to watch for following the IPO launch.

What’s So Unique About The Spotify Shares That Are Being Sold In The IPO?

The Spotify IPO is like nothing else that we’ve seen before. Sure, like any other IPO, this one will turn Spotify into a publicly traded company. However, that’s about the only thing that’s the same. Lately, there has been quite a bit of discussion surrounding the unorthodox approach to marketing and celebration of the IPO. Essentially, there will be no celebrations or bell ringings, and marketing will not happen behind closed doors. However, what really makes the Spotify IPO unique is the shares that will be sold during the offering.

In general, when an IPO takes place, the privately traded company sells newly created shares in an effort to raise funds, becoming public in the process. However, when it comes to the Spotify IPO, there will be no new shares created. Instead, the only shares that will available during the IPO are shares that have already been issued and that are already owned by shareholders in the company. Personally, I’ve never seen an initial public offering transaction quite like this one, and after doing quite a bit of research, I don’t think that there has been a history of a transaction like this in the past.

Why This Is Likely To Lead To A Tremendous Spike In Value

At the end of the day, the unique way in which Spotify is going about its IPO will likely create a bit of a spike. The reason for this is relatively simple. During a traditional IPO, newly created shares are made available. This means that the supply of shares is generally large enough to cover the demand for those shares. However, this isn’t the case when it comes to the Spotify offering.

As mentioned above, the only shares that are going to be made available during the Spotify IPO will be shares that are already owned. Therefore, in order for a share to be available to purchase, a shareholder is going to have to want to sell. With the lack of supply on the market, demand is likely to naturally outpace the supply of shares, ultimately leading to a spike.

Think about it, demand for a Spotify IPO is going to be incredibly large as is. The company is right behind Pandora when it comes to streaming music market share and it has built its way to become a household name. This is naturally going to create demand. However, by creating the “you can’t have it” feeling due to limited supply, demand could grow even more. Not to mention the fact that the unorthodox way in which the company is going about its IPO is leading to more publicity than the average IPO sees. Putting this all together suggests that we’re going to see some pretty strong demand, leading to heavy spikes in value on the day of the IPO.

What To Watch Following The Launch

With the IPO just around the corner, we have exciting times ahead. To take advantage of the movement, make sure to keep a close eye on the shares available for purchase and the demand for the shares upon the IPO. Also, watch for wild swings as large shareholders offload and those looking to get involved pick up the shares that become available! Nonetheless, the Spotify IPO is likely to be one of the most exciting offerings we’ve seen in some time!

By Boris Dzhingarov

© 2018 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.