HOW TO BUY VICE MEDIA STOCK IF IT HAS AN IPO

For those wishing to buy Vice Media stock, 2017 might be the year they can do it. Vice is an up and coming youth/millennial focused media news outlet that believes it is in the right place at the right time. Investors in the private company include Disney, A&E Networks, and 21st Century Fox and its valuation is thought to be above $4.5 billion.

Vice Media’s CEO Shane Smith said in December 2016 that the company had been talking to banks and exploring its options in regard to going public. The time for an IPO might be soon based on his belief that the company caters to millennials and is positioned correctly in what may be a tumultuous next couple of years in the news and media industry. Smith said that Vice needs to keep growing and expanding its reach and can do that by having an IPO which will give it the funds needed to make various acquisitions.

Vice Media Reaches A Different Demographic

To see a list of some of the properties of Vice you can scroll toward the bottom of this page. Vice targets the younger generations of people that aren’t interested in mainstream news. Its programs and material has been ridiculed and dismissed by “real” journalists and “real” media outlets for many years because it is unlike anything we have seen before.

Whether you agree or disagree with the sometimes controversial programing on any of the Vice platforms, one thing is for sure: the company allows advertisers to reach a totally different audience than other media outlets. Vice strives to serve news that is cutting edge and raw and that appeals to those who want nothing to do with the stale and predictable news coverage of traditional media. By catering to a totally different demographic than “normal” news, Vice gives advertisers a new way to reach this very young audience. Viewing the companies continuing success and growth, that is why it has IPO plans and why investors would want to buy Vice Media stock.

Will Vice Media Stock Be A Good Investment?

To get a better idea of where Vice came from and where it is going you might read this piece that explains a lot of the back story of the company. Vice Media is in the midst of trying to somewhat distance itself from its somewhat shady past and show that it is a new media company that is genuine and yet edgy. It is vital for Vice to continue to try to gain an ever increasing audience among the under 30 crowd and show advertisers that it appeals to a cross section of that demographic.

Traditional media is in an absolute upheaval right now with newspapers and radio stations finding it very hard to survive, many of them going out of business. People have changed and are changing their media consumption habits as on demand music, video, news, and movies is now the preferred method. Vice Media, to be a good stock and investment should it IPO, will have to keep ahead of the curve and stay in front of this wave of change that we are seeing. It will have to continue to make the programing and content that the under 30 crowd want to see and stay current on the ways to deliver that content. It is an exciting time to be in the businesses it is in but also a difficult time that requires a lot of forward thinking and planning.

Ewan Spence: Forbes’ Professional Apple Basher

Forbes used to be a quality, reputable magazine. But I guess its hard to make money in the printing business now days and every magazine has been forced to go online and sink into the gutter. Readers of Forbes.com will be deluged with ads and videos that automatically play. The actual content is scrunched in the middle of a big ad bar on the right, a big ad above the content, and a left margin with video and other stories. Honestly, the Forbes website is extremely frustrating to try to read and looks like it was slapped together by a child trying to make money with ads. Very sad.

Then there is the content which more and more, revolves around clickbait titles and authors that write controversial bits just to get clicks. At least that is the way it is for writer Ewan Spence who apparently makes his living by bashing Apple week after week. Either he hates Apple for personal reasons, is short the stock, or has realized that he can get the most clicks by pumping out a negative spin on almost every product the company produces. This is one author that should be reined in, unless Forbes has decided to throw out all its journalistic impartiality and become nothing more than a negative clickbait machine.

Lets take a look at Ewan’s articles that he has pumped out on Apple just this month, December 2016. I hate to give him the links but there is no other way:

Apple Slammed Over Major MacBook Pro Problems – December 23

Apple AirPods: A Musical Delight Spoiled By Awkward Problems – December 20

Apple’s Hidden Fix For Your MacBook Pro Problems – December 18

Apple’s Penalty Charge For A Lost AirPod – December 15

A Terrible Week For The New MacBook Pro – December 15

Apple’s Latest Fix For Your Frustrating iOS Problem – December 12

Surface Book: The Stylish Laptop That Trumps Your MacBook Pro – December 10

Apple’s Growing iPhone Battery Problem – December 9

Razer Blade: The Ferocious Hidden Power That Trumps The MacBook Pro – December 3

Black Friday Pixel Defeats iPhone – December 2

Apple Confirms Frustrating iOS Problem – December 1

After reading that list of titles is it possible to believe he doesn’t have an agenda? Obviously he makes a good chunk of his income bashing Apple in every way he can possibly think of. If its not a direct attack on an Apple product he deftly gets the hits in by saying something else is superior.

Spence is from Scotland and maybe hates America? I don’t know and it is his right to hate Apple (and America if he wants to)  but the problem is he is doing it under the Forbes name. He isn’t writing on some personal blog or website but doing it in Forbes. That diminishes the trust of Forbes as I have now realized that it is nothing more than an advertising click machine with writers trying to pump up the clicks in any way possible.

So, I will try to avoid Forbes as much as possible from now on. My trust has been violated and I am no longer a reader.

Stock Market Up Or Down Because Of Trump In 2017?

Trump stock marketIts December 1st, 2016 and the U.S. stock markets are right near all time highs. We’ve had the craziness of the Trump election which initially pushed stocks down around the world until investors quickly reversed their thinking and decided that Trump would be good for business rather than bad. What is an investor to do now?

Unfortunately, just like the election that showed how split the United States is, there is a big split in what the “experts” are predicting for the stock market as well. Searching the Internet you can find opinions that aren’t just differing slightly but ones that are completely opposite.

This guy gives 4 reasons why the economy will do great under Trump and is probably the closest to what investors are thinking as they take the market to new highs. But then this guy (who is obviously a liberal Democrat) says the economy is going to tank.

Usually the truth is somewhere in the middle of two opinions that are so opposite and that is probably what will be the case this time as well. Will stocks crater specifically because of Trump’s new policies? That’s doubtful. Will stocks soar in 2017 and beyond specifically because Trump is generally pro business? That’s doubtful as well.

We have a connected world more than ever right now and what will happen in specific locals (Italy, Greece, China, etc.) is unknown and can affect our markets greatly. Yes, Trump can and will make moves that will prove to help or hurt things but the United States isn’t alone in the world anymore. It is the biggest and most influential player but there are so many moving pieces that the market could tank on all sorts of news that has nothing to due with Trump. Likewise, we could have a steady market continue in an uptrend as world problems get worked out, with no influence from Trump.

There have been a lot of knee jerk reactions after the U.S. election and the news continues to be filled with them daily. But when you make knee jerk stock decisions, that is often the wrong thing to do. So stay calm, keep some money on the sidelines, and continue to buy companies that you think have bright futures ahead of them. That is the smartest way to play the stock market.

HOW TO BUY XIAOMI STOCK IF IT IPO’s

Xiaomi stockIt looks like you won’t be able to buy Xiaomi stock for quite a while as the company is currently privately owned and the CEO has stated that an IPO may not come until 2025. Lei Jun started Xiaomi in 2010 and is most recently quoted as saying that he believes it will take the company 15 years before it can successfully go public. That would put the IPO date at 2025 which means investors will have a long wait ahead.

Being a private company means you can’t directly invest in Xiaomi right now and will have to wait for it to go public. You will need to have a funded online broker account in order to be able to buy its stock if it does eventually IPO. What exchange Xiaomi decided to list on (a Chinese, Hong Kong, or American stock exchange) may also affect your ability to purchase stock shares.

What Products Does Xiaomi Make?

Most famous for its low cost – high quality smart phones, Xiaomi is often referred to in the media as “China’s Apple”. That is why so many people want to buy the stock, in hopes that the company can someday approach the kind of success Apple has had. However, almost all their sales are done online in China and the company has just started making some of their products available in the United States.

If you go to the Xiaomi website (November 2016), the only products you can buy online Internationally are the in-ear headphones, the over-the-ear headphones, the power bank, a small fan, and the Mi Box. The selection of smart phones and smart devices are not for sale yet. The Mi Box is a direct competitor to the Amazon Fire Stick, Apple TV, Roku, and Google Chromecast and is Xiaomi’s first product that it being introduced into the United States.

It is presumed that at some future date Xiaomi will start bringing more of its products to U.S. and International consumers. The fitness bands are inexpensive and well made according to some reviews and will probably be the next product to be available. But investors will be waiting for the eventual introduction of the lineup of Mi phones which will get a lot of news coverage when they finally make the jump into the U.S. market.

Xiaomi May Be In Trouble

Because Xiaomi has so much private funding, the company was thought to be valued at between $45 and $46 billion. With the cash it has been able to get from private investing groups, the company has never felt the need to rush to go public like some startups do.

But has everything changed?

According to some reports (here and here), Xiaomi has encountered some very rough times in recent months which has dropped its valuation significantly. Competition has come from other Chinese phone manufacturers that have released phones that are at least just as good and maybe even better. This has put a dent in Xiaomi’s latest sales numbers and leaves serious doubts into its future IPO plans.

Brand loyalty has become an issue with Xiaomi as its phones don’t have any sticky ecosystem or any other reason to prevent Chinese customers from switching to other manufacturers. Additionally, Xiaomi’s desired worldwide expansion of its phone lineup has not happened yet and it may have to delay such plans if the company can’t turn things around in China first.

Will There Ever Be A Xiaomi IPO?

One of the biggest problems the company faces and one that anyone wanting to buy Xiaomi stock should consider is the razor thin margins it gets from all products. Its the thing that made Xiaomi famous (quality at a cheap price) and ironically it could eventually be its downfall.

This profit margin of error is so little that any hiccup in product production or sales can seriously impact the company going forward. Its great to offer quality products at a cheap price but that leaves a company like Xiaomi very vulnerable when the slightest thing goes wrong. Xiaomi initially grew at such an astounding pace and got so much positive publicity that the company might have underestimated the long term obstacles is could or would face.

Xiaomi may indeed have an IPO in 2025 or sooner but right now investors will have to take a wait and see approach. Even if the company did IPO sooner than later, it seems like it would be prudent for any investor to be very cautious before buying its stock and have a full understanding of the challenges ahead for Xiaomi.

YOU CAN’T BUY INSTAGRAM STOCK

Instagram stockIt is one of the most popular and successful social networks, but investors can’t buy Instagram stock even if they want to because Facebook beat them to it. It was April 2012 that Facebook founder Mark Zuckerberg bought Instagram for $1 billion and it has turned out to be one of his best purchases ever made.

The problem with investing in social media sites is that there are so many of them that it is difficult to guess which ones will stand the test of time and actually make money. Twitter has been a failure along with Periscope which it owns, Vine has just shut down, and Meerkat has also shut down as well. Facebook is the big winner and investors are now clamoring to buy Snapchat stock at its future IPO with the belief that it will also be a winner. Instagram has quietly become a very popular and profitable photo sharing site but investors will have to buy Facebook stock (FB) if they want to get a piece of it.

How Popular Is Instagram?

In Facebooks earnings release on 11/2/2016, Zuckerberg said that Instagram has more than 500 million monthly active users as well as more than 300 million daily active users. The platform is now built out enough and has enough users to let it enter the third phase of the plan: allow businesses to reach more potential customers by opening up tools within Instagram. What that means is that its time to really turn on the ads and start making money!

Instagram Stories (a blatant Snapchat ripoff) was successfully launched in August and it reportedly now has over 100 million active users. The company has also upgraded the Explore Tab within Instagram to include more videos and stories and that feature is also getting 100 million actives every day. All in all, Instagram is doing very well and is now just starting to hit full stride in terms of monetizing the site.

But Instagram Is Just A Small Part Of FaceBook

As mentioned above, the only option for anyone wanting to buy Instagram stock because they like the business is to buy its parent company Facebook. But Facebook is much, much bigger than Instagram and so if you buy FB stock you are getting the whole company which is comprised of many things. Facebook just warned that even though it is still growing, its advertising revenue may level off in 2017 because many of its platforms (WhatsApp, Messenger, Facebook) are already running a lot of ads. There are only so many users in a finite world so growth has to eventually slow down and there are only so many ads you can show them, for a variety of reasons.

This means that however well Instagram is doing individually, investors value FB stock as the sum of the parts and the other parts may begin to see slower growth starting in 2017. So, if you decide to buy the stock, you aren’t getting anywhere near a pure play on Instagram.

SHOULD YOU BUY PINTEREST STOCK?

buy Pinterest stock2017 could be the year that investors finally get to buy Pinterest stock. In early October 2016, Pinterest hired its first CFO (Todd Morgenfeld) and industry insiders are speculating that the move is the companies first step toward an eventual IPO. However, as of late 2016, there is still no official word from Pinterest on any plans to offer stock to though a public offering so investors will have to continue to wait.

Pinterest is reported to be valued at $11 billion which puts it just outside the top 10 most valuable private companies in the world. Its user base is 150 million and it is now attracting more men than it did in the early years when the site was dominated by women. 2015 revenue was $100 million and investors will be extremely interested in Pinterest’s growth rate and ability to attract advertisers before buying the stock on its opening IPO day.

Will Pinterest Stock Be A Good Investment?

Pinterest is different than most social media sites because it is NOT a communications platform. It doesn’t compete with Facebook, Snapchat, or Twitter but it does compete with Etsy and to a lesser extent Instagram. Pinterest users delight in looking through the more than 75 billion pictures and often use the site to get ideas about pretty much everything in life.

With so many pictures of products and ways to use products, one would think that Pinterest might be a gold mine for companies looking for ways to target their advertising budgets. Clearly the potential is there but if the stock is anything like Etsy, then investors should be careful. Etsy had its IPO in April 2015 and its stock price a year and a half later is down about 50%. Etsy and Pinterest are definitely not the same business models but they both focus a lot on products and Pinterest will have to do a better job of monetizing if it hopes to have a successful stock.

One of the delays of a Pinterest IPO might be the challenge of figuring out how to best monetize the site. It seems to be backing off the “Buy” button it introduced earlier in favor of making money through traditional advertising and charging for “Promoted Pins”. This means it will be vying for its share of the estimated $30 billion that advertisers will spend on social media advertising in 2017.

How To Buy Pinterest Stock

If Pinterest does eventually go public, individual investors will have a difficult time buying the stock before the IPO day. Usually it is only company insiders, hedge funds, large dollar investors, and those who are well connected that get to buy in at the pre-IPO price. Investors who make up the bulk of the population and trade online will only be allowed to buy the stock once it opens for trading on an exchange the first day of the IPO.

Buying Pinterest stock after it opens for trading will be easy to do through any reputable online broker and all you will need to know is the ticker symbol. Pinterest’s stock ticker symbol will be announced a month or two before the IPO.

It should be noted that often times on well publicized IPO’s (and Pinterest might be one of those), investors collectively bid the stock up too high in their enthusiasm. The stock’s opening day hype leads to a stock price that falls in the weeks and months after it goes public. While it is impossible to know whether this will happen to Pinterest’s stock price after the IPO, it is something to be aware of before jumping in the first day.

HOW TO BUY LYFT STOCK – IPO IN 2017?

buy Lyft stockInvestors wishing to buy Lyft stock will have to wait at least until 2017 for the company to go public with an IPO. The company continues to expand aggressively into more US cities along with a handful of International cities and any IPO will have to wait. The ride sharing business is still not a profitable one for either Lyft or its main competitor Uber due to all the funds these two companies are deploying toward expansion.

In late 2016, Lyft is estimated to be worth about $5.5 billion which is less than one tenth of Uber’s valuation. If Lyft cannot start to close that gap, it could have an affect on Investor’s willingness to buy the stock should the company decide to go public.

You Might Never Be Able To Buy Lyft Stock

In August of 2016, rumors started circulating that Lyft was shopping around the idea of selling itself to potential buyers including General Motors, Google, Apple, and Amazon. But company President John Zimmer officially repudiated those rumors saying that Lyft was absolutely not for sale and not looking for buyers.

The idea of Lyft getting bought out by a bigger company actually makes a lot of sense and could happen sometime in the coming months or years. Clearly, ride sharing and autonomous vehicles are thought to be a big part of our transportation future and a company like GM or Google that has that type of aspirations and has enough money to buy Lyft could save a tremendous amount of time by buying it.

At its current valuation of $5.5 billion, it would be a big acquisition but one that is not out of the question and might be welcomed due to Lyft’s battle with Uber that it seems to be losing. Should a Lyft buyout ever occur, it would mean the company would never have an IPO and investors would never be able to buy stock in the company.

Government Regulations Continue To Trouble Lyft

Both Lyft and Uber continue to encounter pushback from an assortment of governments. Local, city, state, and other governments are all grappling with how Lyft affects the well entrenched taxi cab business as well as how to ensure the safety of passengers as they increasingly use ride sharing services. Lyft has encountered a constance barrage of regulations and rules that hampers its ability to offer its services in certain regions. Much money has been spent fighting such regulations and it seems there is no end to the legal challenges it may face in the future. Funds must be allocated by Lyft for the express purpose of challenging the legal obstacles placed before it just so it can continue to do business.

The legality of ride sharing will eventually be figured out but how many years it will take and the money that must be spent in courts by Lyft is unknown. For Lyft to have a successful IPO in 2017 or later, there must be some clearer path to profits than there is at this time. This is one of the main reasons that Lyft is not in a rush to go public and wants to get its business on firmer ground before offering an IPO.

Lyft Will Either IPO Or Get Bought

Any company valued in the billions as Lyft is will either go public or get bought out. Should it decide to go the route of having an IPO, it will give individual investors an opportunity to buy Lyft stock and own one of the two dominant ride sharing companies. Since ride sharing seems to be gaining in popularity worldwide, this type of company is one that many people think will succeed and any IPO will get a lot of attention. As of late 2016, the “sharing” economy is booming but investors are still unable to buy stock in any such company (Airbnb, Uber, Lyft, WeWork, etc).

Stocks of companies that people personally use usually get more hype at IPO time, especially when they represent a new business model as Lyft does. But while an IPO will probably be successful and get lots of press, whether buying Lyft stock will be a good financial move is another question. Lyft will have to prove it can be profitable and compete with the much larger Uber at the same time for the stock to do well during the months and years after the IPO. It will have to successfully show that it can operate in a variety of locals and it will probably have to continue to expand its reach internationally as well.

Stock Market Week Of September 12 – 16

This week is a bit different than most. First, we have very few companies reporting earnings. Second, this week is triple witching week (TWW). Third, we have traders and investors scrambling to react to the 2-3% drop in the market on Friday.

Is this a buying opportunity? Should we sell before the market drops further? At the moment, the best gauge of the market is the futures market, which is in the red and predicting another 1% drop at the open.

This is important. Statistically, a down Friday followed by a down Monday often points to a market top. In other words, we should see Monday as a selling opportunity or a short opportunity.

Of course, the Fed will and must inject liquidity into the market if we see a decline of 10% total. But the 10% pullback, if witness via put options, can be especially profitable for short-term traders. Investors should be looking for the bottom of this pullback to seeking buying opportunities.

Oddly enough, this week is seasonally bullish, as are most TWWs. But TWWs are also typically followed by bearish pullbacks. However, during non-bull markets, TWWs lose their bullishness and tend to be bearish!

Thus, the down-Friday, down-Monday possibility during this TWW is a strong indicator – statistically – that we have hit a market peak. At the very least, we will see this season’s pullback. As every season seems to have a rally, so does it have a pullback.

This season’s rally was in July. Timing-wise September seems to fit in the seasonal trend of “2 steps forward, 1 step back.” However, the fear is that with the other indicators perhaps we are to be taking more than 1 step back.

Again, Monday is the key here. If it’s down, we have a signal to position for the downside. But Monday has one event that could turn the market around: Brainard is speaking.

With the Fed no longer pretending to be unbiased toward market direction, Brainard is likely to give a dovish speech. The rate hike will be postponed, just as it was last year despite the Fed claiming it would be raised in September (history repeating itself…). If so, we can expect a bump in both the market and in gold prices.

Thus, we have a tug-of-war: Momentum vs. the Fed. But the latter is the only of the two open to interpretation and prediction. As for predictions, the very fact that Brainard is speaking on such short notice be taken by investors as likelihood for a hawkish statement that reiterates the Fed’s plan to raise interest rates.

Still, the Fed is more likely to act in alignment with its not-so-hidden agenda to stabilize the market. That is, Brainard will issue a dovish speech, and the market will rebound.

In the end, the tug-of-war between momentum and the Fed will determine Monday’s candlestick color. A red should send you to position for a top. Make sure you’re able to hedge your positions before Monday’s close.

Disclaimer: As always, consult your financial advisor or stock broker before making investment decisions and DO NOT base decisions on this website which is here for entertainment purposes only.

HOW TO BUY LUFAX STOCK

buy luffa stockInvestors will have to wait at least until 2017 to buy Lufax stock as the company delayed its IPO aspirations according to CFO James Zheng. It seems likely that the Chinese peer to peer lending company will try to list on the Hong Kong stock exchange and hopes to be able to do that by 2017.

Valued at approximately $18.5 billion after its latest round of funding in early 2016, Lufax is taking the time to make sure that the company sufficiently grows before its IPO. Additionally, financial technology companies in China are facing increased government regulations after fraud was discovered which could lead to plummeting trust among the public for this type of business model and stock.

If Listed In Hong Kong, You Won’t Be Able To Buy Lufax Stock

The current plan to have Lufax IPO in Hong Kong would mean international investors will not be able to easily buy the stock. Typically, in order to buy Hong Kong stocks you would need to sign up to and have money in a broker that allows you to buy stocks on that exchange (in other words, a Hong Kong stock broker). Unfortunately, none of the US online discount brokers will let you do that. The American exchanges along with some over the counter stocks are the only ones that most online brokers will let you buy.

At some point Lufax may decide to have an ADR which is a way around that but it wouldn’t happen right away. Should there ever be a Lufax ADR available, it would mean investors worldwide could buy the stock because American Depository Receipts are listed on the US exchanges and are traded just like regular stocks.

Difficulties Ahead for Lufax And Peer To Peer Lending

Even though Lufax has plenty of cash and has such a high $18.5 billion valuation, it doesn’t mean there is clear sailing ahead. Lufax has constructed its business model around Lending Club and other peer to peer lenders that operate in the USA. Lending Club (LC) went public in December of 2014 at a price of $15 and in the next few trading days the stock was bid up to almost $28 a share. However, the stock has seen nothing but pain in the months and years since then. Please see the chart of Lending Club’s stock history which shows a steady drop all the way down to just over $5 where it trades in late 2016:

Lending Club stock (LC)

 

 

 

 

Clearly any investor in LC has been very disappointed and has probably lost money. This shows how difficult the peer to peer lending business model is and how poorly one of Lufax’s “competitors” has performed. Considering the myriad of laws and regulations such a company has to jump through to conduct business, whether it is in China or The United States, peer to peer lending is still a new concept that is fraught with legal challenges and hurdles. Fraud is also a concern which needs to be detected and stopped immediately should it occur, otherwise it can cripple such a company quickly.

Undoubtedly there will be an IPO at some future point but investors should fully understand the business model and risks should they want to buy Lufax stock. The company operates a website that is in Chinese and impossible to understand unless you are fluent in the language. International investors will find it very difficult to find information about the company and its financials in a language they can understand and should be very careful to do extra due diligence before investing in the stock.

HOW TO BUY SPOTIFY STOCK – IPO IN 2017?

buy Spotify stockBecause it is a private company, you can’t buy Spotify stock until it has an IPO. It now looks like investors are going to have to wait until at least 2017 before that happens and perhaps even longer.

Spotify’s valuation is between $8 billion and $8.5 billion dollars after it raised more $1 billion in debt in early 2016 to go along with over $1 billion in equity funding. That is the money the company is currently using to run the business. In August 2016 it is being reported that Spotify has about 39 million paid subscribers and over 100 million users in total. That number, if true, would indicate it probably has at least double the number of paid subscribers that Apple does.

Buy Spotify Stock In 2017 If It Has An IPO

The earliest you will be able to buy stock in Spotify will probably be sometime in the second half 2017. If the company can iron out all its problems, it will decide to go pubic which will open up the doors for individual investors to buy its stock on one of the American exchanges. However, there are some roadblocks before that can happen.

  1. Spotify has been in existence for 10 years and has never made a profit. The good news is that revenue keeps going up and the hope is that eventually revenue will exceed expenses. But since the music streaming business model is so new and untested, it has yet to be determined if any music service (Apple Music, Google Play Music, Amazon Music, Pandora, Spotify) can make a profit. This unanswered question is something that might ultimately lower the perceived value of Spotify when it tries to IPO.
  2. As of August 2016, Spotify no longer has contracts with any of the big three music labels (Universal Music Group, Warner Music Group, and Sony Music Entertainment). It is operating as is under expired contracts but it needs to get long term deals signed before any IPO can take place. The problem is that these music labels want to raise the percentage of revenue paid to them from Spotify’s current 55% up to 58% which is what Apple Music is currently paying.
  3. Spotify’s long term challenge is to compete against its deeper pocketed competitors which are Apple Music, Google Play Music, and Amazon Prime Music. In each case those three rivals are small parts of much bigger businesses that can afford to make less money than Spotify. In fact, it might be true that those three could even afford to lose money indefinitely which would put tremendous pressure on Spotify because it is a stand alone business that needs to become profitable if it is going to have an IPO.

Spotify Continues To Gain Users At All Costs

Spotify’s fate depends on whether it can add enough users to become big enough that it can’t fail. In other words the more users it has, the more it will gain bargaining power and pricing power which will help it combat its main rivals. Most people resist changing music services because it is usually hard (or impossible) to import playlists from one service to another. Therefore, the more users Spotify can add to its numbers bodes well for its chances for survival, no matter what its competitors do to thwart it.

Spotify is clearly working hard toward an IPO and wants to get listed on an exchange as quickly as possible but the IPO is still most likely a year or more away. A lot can happen in that time and there is a possibility that at some date in the future Spotify could internally determine that selling to a highest bidder is its best option. If its current business model doesn’t bring it the necessary profitability, it might decide to sell itself to a bigger player. Were that to ever happen then investors would never be able to buy Spotify stock and only be able to buy the stock of the company that purchased it.