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If you want to take a punt on the Spotify IPO, but aren’t a billionaire Silicon Valley player you can trade the grey market with IG.
A grey market is where a spread betting broker or CFD broker will make up their own price based on what they think the IPO will open at. As described by IG as:
The price of our grey market is a prediction of what Spotify’s total capitalisation will be at the end of its first day of trading. If you think that Spotify will be worth more than the price shown, you can buy the market. If you think that the price is an overvaluation, you can sell it.
This grey market is traditionally different from if Spotify were doing a standard IPO as this is a direct listing. Spotify isn’t raising any money, Spotify is just listing shares of the existing holders for sale.
It’s a good sign because it means the company has plenty of cash, but a bad sign because it’s basically an excuse for original investors to get out without being locked in to holding the stock for a set period after it lists.
Essentially, with the IG Spotify IPO grey market you are taking a pre market bet or trade. Just like you do if you trade after hours on the FTSE or Wall Street.
How can you buy shares in Spotify after it lists?
After the Spotify IPO or Direct Listing most brokers will add the shares to their platform and you can trade away. It may be a bit more volatile as new listings always are. But IG have a share dealing service where you can buy US stocks to hold in the long term.
If you’ve not traded with IG before you can read our in depth IG review here.
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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.