A Back Door to a Spotify IPO?

08/15/2017 2:59 am EST

Focus: TECHNOLOGY

Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

Reuters reports that Spotify – currently valued at $13 billion – is secretly preparing to go public; the Swedish company is getting serious about going public: it has hired investment bankers at Morgan Stanley, Goldman Sachs and Allen & Co., notes Ian Wyatt, editor of Million Dollar Portfolio.


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The Swedish company is getting serious about going public: it has hired investment bankers at Morgan Stanley, Goldman Sachs and Allen & Co.

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.

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.

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.

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.

Two of my recommended Pre-IPO investments actually own shares of Spotify. Those who invest in the SharesPost 100 Fund (PRIVX) or GSV Capital (GSVC) will indirectly own private shares of Spotify before the stock starts trading.

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