The Spotify IPO Will Launch on the NYSE, but There's a Better Profit Play

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We now have confirmation the Spotify IPO is on track for either 2017 or the beginning of 2018.

And according to a May 12 Fortune report, the music streaming service will list shares on the New York Stock Exchange (NYSE).

However, there's an interesting development with the Spotify initial public offering…

What the Spotify Direct Listing Means for Retail Investors

Spotify CEO Daniel Ek is planning a direct listing for Spotify stock. A direct listing will eliminate the need for a broker to underwrite the IPO, which will reduce fees. It will also allow employees to cash out their shares without underwriting fees.

And direct listings also have a major perk for retail investors.

Before a public offering, underwriters set an initial offering price for shares. That price is only offered to hedge funds, massively wealthy investors, and large institutions. It's also normally lower than what retail investors pay.

For example, well-connected investors were able to buy shares of Snap Inc. (NYSE: SNAP) for $17 per share. When the public was able to buy shares of SNAP on March 2, retail investors had to pay $24 per share.

However, all of that is avoided with a direct listing.

Trending: Top IPOs to Watch in 2017

According to CNBC, Spotify stock will have no predetermined price. Investors will only be able to buy shares of Spotify on the open market.

While this levels the playing field for retail investors, we still advise Money Morning readers to avoid investing in Spotify stock.

The company is still a money pit that shows no sign of profitability. There isn't data on Spotify's revenue for 2016, but Spotify has reported negative income from 2009 to 2015.

However, I uncovered a backdoor strategy at the end of March that lets investors profit from the music streaming site without owning a single share of Spotify stock. This investment opportunity has netted gains of 35.68% since I first brought it to the attention of Money Morning readers on March 28.