The Spotify AB initial public offering is quickly approaching.
It will probably be the biggest technology IPO of the year – and it's definitely the most watched one right now.
That's true for two reasons.
- Spotify is the leader in online music streaming, boasting some 140 million monthly active users – 70 million of them paying subscribers. That's well over double the 30 million paying members it boasted just two years ago. Plus, it's got a name brand that's just about tops among tech startups and a pre-IPO valuation of more than $19 billion.
- It's pursuing an unconventional IPO. While it's listing on the New York Stock Exchange, instead of using underwriters (i.e., big banks) to help sell the stock, set a price, and find interested buyers, Spotify is using a "direct listing" for its IPO. That means that every investor will be able to buy the stock at the same price on the day it opens. This gives retail investors the same opportunity as the hedge funds and other Wall Street sharks.
However, despite its popularity and success at obtaining and keeping paying subscribers, Spotify is still losing money and holds a significant amount of debt.
Plus, a company's stock price after an IPO nearly always has volatile price swings – the kind that'll make even veteran investors pull out their hair.
So here's the thing: I don't want you to put any of your money into the Spotify IPO.
I want you to listen to this "secret" instead…
The "Secret Passageway" to Wealth
Don't get me wrong. As a longtime advisor to Silicon Valley startups, I'm a big believer in the value of IPOs.
The chance to take exciting new tech firms public and make founders and early investors rich remains a driving force behind Silicon Valley's huge success.
Plus, new stocks are important for the overall market's health. For a generational bull market like this one to keep running, it needs to have a steady supply of fresh cash – and nothing brings in as much money as hot new IPOs.
But there's a problem – and it's a big one. Most learning investors fare poorly in the early days of trading a new stock – even a "direct listed" one like Spotify. This is when the shares are most volatile and subject to profit-taking after employees, venture capital firms, and others bound by lock-up periods can sell their shares for big profits.
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As much as I respect Spotify, I can't help but recall the Snap Inc. (Nasdaq: SNAP) IPO. Snap, the owner of the popular Snapchat picture-messaging service, last year had an IPO that Wall Street promised would be an easy home run.
Instead, the stock is down about 55% down from its first day of trading on March 2, 2017.
Now you can understand why I tell learning investors who want to cash in on the IPO market to take a good look at this instead.
Consider it a "secret passageway" to the tech sector's biggest profit machine…
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.