Spotify IPO! Is Spotify a Buy?!

Link to join StockHub free investing discord server: –~–

Spotify is going public and so many you guys have been asking me is spotify ab i should we be buying spotify ipo guys they’re supposed to go public here very soon and we’re going to take a full in-depth look is spotify and kind of judge it from the pros as far as this company goes versus the cons now i usually don’t talk about ipos very much unless it’s a huge one

Okay the last time i spoke about an ipo i think it was a snapchat ipo which was like what six or nine months ago it was quite old quite a while ago right i usually don’t speak on them for a couple reasons one usually ipos or unprofitable companies the majority time they’re unprofitable businesses i don’t really invest in unprofitable businesses i like to invest in

Companies that are making money okay too when a company goes public no company’s owners are gonna take a company public unless they can sell out for at least a fair valuation or an overvalued valuation on that company okay if you and i owned a company together would we be like let’s those sell our shares for an undervalued price absolutely not you and i would only

Want to go sell our shares if we get maximum top dollar for that that’s the only way we’re going public other than that otherwise why would we even want to go public there’s no reason there’s no reason right we can raise money in the private markets we don’t need to go public and things like that guys so let’s look here spotify files to go public as a disclosure

Subscriber growth and heavy losses also exciting the world’s largest music streaming service for those you guys do not know announced plans to go ipo so spotify the world’s largest music streaming service has filed in i initial public offering today the sweden based company co-founded by daniel 8 who has remained at ceo since 2006 inception and martin lorenzen has

More than 71 million paying users as of december 2017 the company also enjoys an overall base that includes ad-supported free listeners of a hundred and fifty nine million far outpacing the competition from apple google title and others spotify will trade on the new york stock exchange under the ticker symbol spot spotify will be offering a direct listing meaning

Shares can be trading on the open market sooner than with a move on a conventional ipo as spotify doesn’t intend to raise a large amount of capital with the ipo so spotify shares have traded on the private markets and it could be of somewhere amount of twenty three billion dollar valuation somewhere around there the filing gives us the best looks yet into spotify

Finances with the company posting revenue last year of nearly five billion dollars that’s very nice and a net loss of a 1.5 billion they took a loss of about a 1.5 billion dollars last year guys that is that is really really rough there okay also included is the latest update on spotify as total users with a hundred and fifty-nine million monthly active users

Currently in 71 million premium paid subscribers on their paid subscribers grew 46 percent year-over-year last year while active users are up 29% by comparison apple music still only has around 36 million paid subscribers although it is forecasted to potentially pass spotify by this upcoming summer alright despite the success over the years as one of the earliest

See also  What Happened to this Channel?

And most promising music streaming businesses spotify has struggled to turn a profit given the razor thin margins of streaming with most of its revenue dedicated to paying licensing fees to music publishers alright this is the same thing that kind of went on with pandora pandora we’ve seen this stock go public several years ago it wouldn’t ipo was somewhere around

16 19 dollars after that dropped way down to around the $8 range for a long time it spiked up to $43 and then it dropped all the way down now it’s pandora’s a $4 stock pandora has never made a profit and probably never will make a profit and they’re actually a competitor of spotify but basically these licensing fees you have to pay for the artists and whatnot they

Eat up all your profit they end up eating up all your profits you end up making nothing as a music publisher so let’s talk about this guys let’s talk about this so spotify they’re going public for 20 extra zillion dollars what does this company have going for it that’s a good thing okay so first thing i think about is 71 million paid subscribers okay 71 million

Paid subscribers hundred of fifty nine million total people using the service monthly okay some are just on the ad platform and some are paid obviously 71 million being paid they are growing okay they are growing currently they’re their bases and whatnot those are all very very good things all right you’ve got a lot of people using this service a lot of people

Paying for it and it’s a growing service those are all positives those are all definitely good things okay and they’re definitely in a growing category overall which is music streaming that’s just becoming more and more popular so then pros definitely got some pros but we got some cons with this company okay the first thing i think about is they just took a 1.5

Billion dollar loss last year okay they took a 1.5 billion dollar loss that’s insane guys okay they took a 1.5 billion dollar loss this company probably won’t be profit profitable any time soon so no profits for this company i don’t see them being profitable any time soon maybe someday down the road they can get there you the numbers are still not up when you’re

Taking a 1.5 billion dollar loss like they are in order to make this a profitable business they would need a jack up you know basically the prices they charge substantially but then also you risk if you’re gonna jack up the price is huge you risk losing a lot of your paying subscribers right so that’s that’s not a good thing then we kind of look at it from okay

What what is there a common of their competitors what are the apple is a direct competitor them apple is a direct competitor to them with apple music okay who else is a direct competitor to them google google mcdougal is a direct competitor with spotify who else is another competitor amazon amazon is another one that wants to win this game okay amazon is a direct

See also  What is a Hedge Fund

Competitor also we have smaller services like title like pandora things like that that are the smaller dogs but these are the main guys okay so spotify why would i ever even think about investing in this company this is a company that yes or they do they do the numbers look good right now 71 million paid subscribers growing business okay remember this is a business

That we have to pay a 20 plus billion dollar valuation for they took out 1.5 billion dollar loss and they’re not a projector to make money anytime soon okay this is a company that has apple google and amazon as direct competitors why in the world would i ever even think for a second about investing in this company okay why would i ever even think for a second when

They’re invested when they’re going against these type of companies good luck to you going on directly up against apple google and amazon all three of these companies have gotten in this space within pretty much the last two or three years and are all taking it very seriously in apple and google’s business models they basically make ridiculous amounts of profit

Apple is the most profitable company in the entire world as far as public companies go okay you’re gonna fight a fight against them apple doesn’t care if they lose a billion dollars in this game in this little particular segment over here they don’t care how much the money they got to spend to beat spotify they will spend that money to win okay google’s viewing

It as the same thing whatever we got to spend this is basically a business where you know we’re gonna try to get whatever exclusive content we can get we’re gonna try to do whatever it is to bring more people on our platform so they end up canceling out their spotify accounts in these companies they don’t care amazon this is a king of losing money okay amazon

Is a king company of losing money maybe they’re the last company ever compared it cares about making profits right they don’t care if they lost ten billion dollars if this was really a space they want to win they’re gonna try to win it all these ones they all got speakers okay that are going into homes they all got speakers that are going into homes and those

Pretty much directly run off of their services okay so there’s no way i would even think for a second not even a second that oh let me buy spotify ipo that is crazy talk that is crazy talk no is it possible you could make money on the spotify ipo is it possible the stock goes up absolutely absolutely it doesn’t matter any crap stock can go up in a short term any

Any company okay i don’t care what it is any crap stock can go up in the short term but over the long term where is this business going i don’t see it going very far and i don’t see it going anywhere when you got when you’re taking massive losses and you got these guys you’re competing against good luck man that’s just not it’s just not so unreal stick for this

See also  HOW TO VALUE A STOCK | NEXT 3X EASY STOCK

Company to even think they’re gonna win this fight this is more than david versus goliath this is like david fell off the mountain and it’s not gonna look good for anymore like this is crazy guys this is crazy i cannot believe anyone would think oh spotify at a twenty plus billion dollar valuation or any valuation for that matter is a good investment long-term

When you’ve got when you’re directly going against these guys it’s just literally makes no sense to me i’m an apple music customer i will plan my stay at an apple music i’m very happy on there i don’t see myself getting off of there for what to get on the spotify there’s there’s no advantage spotify gives me it would actually be a disadvantage it would actually

Make my life more inconvenient if i switch from apple music to spotify and the more people that apple music is is going to get overtime it’s just gonna make their base bigger and bigger and keep those people in the ecosystem same thing with google same thing with amazon this is this is a crazy ipo and the fact that they’re going public and they’re not even gonna

Have any underwriters with this this whole deal they’re gonna not gonna use goldman sachs and jp morgan all these companies for underwriters oh my goodness guys well maybe you can make money in the short term with this stock maybe even make it for a trade you know and hope it goes up that’s gamblin go to vegas if you want to gamble this is the stock market don’t

Gamble and go to vegas if you want to gamble it’s a lot more fun and then then trying to you know trade trade the ipo is spotify who knows maybe it goes up but long-term i do not see it and if you want to make an argument for spotify feel free in that comment section i would love to know your guy’s opinion on spotify if you think this is a real business model that

Has a great chance in the future to work out or if you see this just being a bad bad situation and my opinion spotify shouldn’t be focused on going public spotify should be focused on trying to sell this business to amazon or google or whoever they got to try to sell it to i would just try to focus on selling it if you can get 20 billion sold private-party take

Your money and run out of this one in my opinion as far as if you’re the owner of that business because how are you ever gonna make money in this space how are you ever gonna make money i just don’t see it guys so anyways let me know what your opinion i still wanna know your guy’s opinion on this i would love to hear it anyways thank you for watching guys and have a great day

Transcribed from video
Spotify IPO! Is Spotify a Buy?! By Financial Education

Scroll to top