If you’ve paid any attention to what’s trending in financial markets over the past couple of weeks, chances are that you’ve read or story or two about the planned Spotify IPO. That’s right, the streaming music company is taking its business to the next level by bringing it to the public. However, this particular IPO is very unique. In fact, the unique structure of the Spotify IPO may be a turn off for some, but it will likely become a swing trader’s dream come true. Today, we’ll talk about what’s so unique about the Spotify IPO, why it could become a swing trader’s dream come true, and what you should be thinking about if you’re thinking about getting involved.
Why The Spotify IPO Is So Unique
There are several unique aspects about the Spotify IPO. Some of first unique qualities that popped out at me were announcements that the company wouldn’t be ringing the opening bell or holding any celebratory parties. Then, I learned that the company decided to take a strange approach to IPO promotion by publicly broadcasting a live stream rather than using the generally accepted closed door roadshow. Later, I found out that the company’s management wouldn’t be taking part in any interviews about the company on the NYSE floor on the day of the IPO. However, none of this really floored me. What did was the share structure.
In general, when an IPO is announced, the company announces that it is issuing new shares for sale to the public. However, that’s not at all what Spotify is doing. Instead, during their initial public offering, Spotify will only be selling shares that are already in existence.
One of the key advantages of this is that there will not be any underwritten restrictions with regard to hold times on Spotify shares. So, what is out there, well, it can all be sold immediately. This is the first time I’ve ever seen or even heard of an IPO like this ever taking place. As mentioned above, it’s this unique structure that could make Spotify the swing trader’s dream come true!
Why Is This Structure So Good For Swing Traders
Before we get to deep into why this news is such a good thing for swing traders, it’s important that you get a good understanding for what swing traders are looking for. As the title suggests, a swing trader is in the business of looking for wild swings in value in the stock market. From there, swing traders use technical indicators in order to exploit these swings in value for a profit. So, where does Spotify come in here?
Well, because all of the Spotify shares included in the IPO are already technically owned, we’re going to see unorthodox dynamics when it comes to the supply and demand of these shares. After all, in order for you to buy a share, someone else has to sell one. This could greatly restrict the market of shares available for purchase at times, and open large amounts of shares available for purchase at others, ultimately leading to the wide swings in value that swing traders dream of.
The Spotify IPO is definitely going to be an exciting one to watch. After all, what Spotify is doing is far outside of what we would generally expect from a traditional IPO. With no share restrictions, interesting supply and demand dynamics, and no celebrations, private road shows or even bell ringing events, there’s no telling what’s going to happen!