Spotify is the most popular streaming music service in the world. Over 40 million subscribers worldwide pay to stream songs by top artists like Drake, Justin Bieber, Kanye West, and Adele.
And in order to grow its subscription business, Spotify could go public in the second half of 2017, according to Business Insider.
That's why investors are asking us, "Should I buy Spotify stock?"
Right now, some investors are considering investing in Spotify because the company could be a takeover target.
Before we evaluate Spotify stock and the Spotify IPO, here's a look at who might try to acquire Spotify ahead of an initial public offering...
Who Will Buy Spotify?
Spotify has the most paid subscribers of any music-streaming platform. But it took Spotify roughly eight years to build its 40 billion paid user base. So instead of building a base of its own from scratch, a larger company could simply acquire Spotify.
And that appeared to be Google's plan in 2013...
In 2013, Alphabet Inc. (Nasdaq: GOOGL) planned to acquire Spotify for $4 billion to $5 billion, according to The Wall Street Journal. But the streaming music site reportedly wanted over $10 billion, and the deal never happened.
However, other companies could be willing to pay that price...
Apple Inc.'s (Nasdaq: AAPL) Apple Music service, which launched in June 2015, has over 20 million paying music subscribers. That is half of Spotify's paying customer totals.
New Opportunity: Plot your course to a 7-figure weed windfall with the top pot stocks from every ecosystem -growers, edibles, dispensaries, and more.
With one purchase, Apple could have over 60 million paying customers in its wheelhouse.
If Spotify still wants $10 billion, Apple would only need to spend 0.04% of its $246 billion cash hoard to acquire the company.
If Apple doesn't make a move on Spotify, Facebook Inc. (Nasdaq: FB) could be interested.
In 2011, Facebook and Spotify formed a partnership. The partnership allowed FB users to play songs on Spotify through the social media site.
Facebook users could also share what songs they were listening to on their timeline. Back in March 2016, Facebook also integrated Spotify with its Messenger app.
As of Q3 2016, Facebook had $26 billion in cash and cash equivalents.
And if the offer is big enough, Spotify stock could skyrocket...
Here's a recent example: Textron Inc. (NYSE: TXT) announced on Jan. 25 it was acquiring Arctic Cat Inc. (Nasdaq: ACAT) for $247 million in cash.
That sent the ACAT stock price skyrocketing from $13.09 per share on Jan. 24 to $18.55 on Jan. 25. That's a 41% climb in just one day.
However, there's no guarantee an acquisition will ever happen.
In fact, we have one big reason investors shouldn't bet on a Spotify acquisition...
Why Investing in Spotify Stock Is So Risky
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Spotify generated $2.18 billion in revenue in 2015, but the company is far from profitable.
In the accompanying chart, you can see that Spotify has reported negative income from 2009 to 2015.
Spotify's losses jumped from $55.9 million in 2013 to $162 million in 2014.
That means it almost tripled its losses in just one year.
Spotify reported a loss of $173 million in 2015, which is a 6.7% loss from 2014 revenue totals.
And unfortunately for interested investors, an acquisition isn't likely to happen because Spotify may never be profitable...
As of August 2016, Spotify was paying a royalty of 55% to artists and record labels. But the problem is Spotify doesn't believe it will be profitable until rates are lowered to 49%.
That will be difficult to accomplish, as record labels want Spotify to increase its payouts to 58%.
One way Spotify could offset higher royalty payments is to increase its prices. But because Apple Music, YouTube Red, and Google Play are all priced at or below $10, Spotify runs the risks of losing customers.
This is an IPO to avoid in 2017.
Forget Spotify Stock; Here's the Real Profit Opportunity
The vote across America for marijuana legalization is expected to create one of the biggest wealth grabs in history, transforming everyday Americans into millionaires overnight.
As a service to Money Morning readers, we're now making available a 90-page cannabis investing guide called The Roadmap to Marijuana Millions.
This "bible of weed investing" reveals the world's top marijuana stocks every serious investor should consider right now.
Normally valued at $499, it can be yours absolutely free. To learn how to get your free copy, click here.
This offer is only available to the first 500 people who respond today. So please go here now to reserve your copy.