This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Whilst during a normal IPO, the price of shares is estimated in a range that is then narrowed as demand becomes apparent, during Spotify’s listing, designated market makers on the New York Stock Exchange will build order books to match buyers and sellers, then setting an initial price once the first trade is processed on 3 April.
Not all IPOs are open to the public initially, with the purchase of shares at the official IPO offer price often reserved only for the largest financial institutions. However, due to the unusual nature of Spotify’s IPO, you can be directly involved on the day of the company’s stock market listing along with the rest of the world.
Once shares begin trading on the New York Stock Exchange, they will also be available to trade on Accendo Markets’ platform. Furthermore, as Spotify’s listing is not a conventional IPO, there is no conditional trading. This means that shares can also be shorted from the point of their first trade onwards.
As Spotify’s shares will list directly on the New York Stock Exchange, you’ll be able to trade them with Accendo Markets using CFDs from the opening trade on April 3 onwards. To save on costs and capital, CFDs are an alternative trading option that allows you to go long or short on shares, paying no stamp duty with a deposit of as little as 5% required, although note that newly listed shares such as Spotify tend to carry a 10% CFD margin.
Going long is for those that see growth potential in the company, or who expect demand from investors who missed the initial listing pushing the price higher in the future. They also believe that growth could lead to inclusion on a major index, such as the S&P 500, which could be a driver, while the promise of dividends in the future may also be attractive. Our traders can help you assess potential drivers to make an informed decision.
On the other hand, if you missed the chance to make a quick profit on the initial reaction as the shares traded for the first time, and believe there to be too much hype surrounding the IPO – overvaluing the shares – you could also use CFDs to short-sell shares, affording you the potential to profit from a decline in the share price.
The largest of global IPOs tend to be heavily traded, with significant trading activity for weeks after the listing day. To stay on top of the share price moves and ahead of other investors, having a trusted broker to keep you in the loop pays dividends. If major news is announced when will you find out? That same day? The next?
The benefits of working with Accendo Markets speak for themselves: A dedicated trader will call you with accurate information in-time and on-time, not just some time, to make sure you are able to participate in and react to the world’s biggest IPOs in a cost-effective manner.
To find out how Accendo Markets can help you trade IPOs, contact our trading floor on 020 3051 7461 or [email protected] to speak directly to one of our traders. Alternatively, you can sign up to have the research department’s award-winning content delivered directly to your inbox.
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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