Reuters reports that Spotify – currently valued at $13 billion – is secretly preparing to go public.
The Swedish company is getting serious about an IPO: it has hired investment bankers at Morgan Stanley, Goldman Sachs and Allen & Co.
Most investors will wait for Spotify to start trading on the NYSE. But a select few are using this backdoor to grab shares before the stock starts trading.
This unique pre-IPO strategy is typically OFF LIMITS for most investors. Yet our research reveals a simple and easy way to grab an early stake. Click here for instant access.
The company is Spotify AB, the world’s leading streaming music subscription service. Spotify has 50 million paying subscribers and generated nearly $2.5 billion in revenues last year.
The company is disrupting the music business with a surprisingly simple offer: Access unlimited amounts of music for just $9.99 per month. Never buy another iTunes album. Simply pay a monthly membership fee and listen to everything you want.
Spotify is one of 167 “unicorns.” These are typically technology companies – with venture capital financing – that are privately held and valued at more than $1 billion.
With a valuation of $13 billion, Spotify would be the ninth largest unicorn. That valuation puts the company slightly ahead of Pinterest ($12.3 billion) and Elon Musk’s SpaceX ($12 billion).
A couple of months ago, The Wall Street Journal reported that the company could go public in an unprecedented transaction.
Let me explain what’s happening in the Spotify offering . . . and how it could create windfall profits for early investors.
Spotify IPO: A Different Animal
According to The Wall Street Journal, Spotify is considering a direct stock listing. That means that Spotify would go public WITHOUT investment bankers and WITHOUT raising money.
In a direct-offering Spotify IPO, the company would simply list its shares on the NYSE or NASDAQ and begin trading.
A direct Spotify offering has several benefits:
- Saves millions in underwriting fees
- Limits dilution for existing shareholders
- Avoids a first trading day “pop” in the share price
- No “quiet period” means company execs can talk publicly
The Wall Street Journal reports, “If the company does list this way successfully, it could create a path for other highly valued technology companies with ready access to cash to quickly move into the public domain without using the typical IPO script.”
This would mean NO investment bankers underwriting the stock offering. NO shares for their preferred clients. In fact, NO new shares offered at all.
How unusual is this?
“So rare that I have never taught direct listings when I teach about IPOs,” said Luke Taylor, a finance professor at the Wharton School of the University of Pennsylvania.
Technology companies and entrepreneurs HATE rules. And this may be another example of breaking with the status quo.
Who profits from the Spotify IPO plans? Likely the existing shareholders including founders, employees and early investors.
Spotify shares are currently PRIVATE. Try getting a stock quote, and you’ll quickly discover that you can’t simply buy the shares on the market.
Yet, using a secret and 100% legal loophole you can invest in Spotify pre-IPO shares.
This special class of shares is now available – months before the Spotify offering.