Discussion Board #2 – Spotify
Spotify (SPOT) is a Swedish audio and media streaming service platform that was
released in 2008. According to the SPOT official website, SPOT’s mission is “to unlock the
potential of human creativity—by giving a million creative artists the opportunity to live off their
art and billions of fans the opportunity to enjoy and be inspired by it” ("Spotify — Company
info," 2018). The company decided to go public on 2018, 10 years after its creation. There were
many speculations on how much the initial public offering (IPO) stock price will be since SPOT
had already sold shares privately. According to an article form the Wall Street Journal (WSJ),
“There has been a flurry of trading over the past week in Spotify’s private shares, with prices as
high as $137.50, up from a previous high of $132.50, according to people familiar with these
trades” (Osipovich & Farrell, 2018). The writers of the article later on mention, “Spotify’s
anticipated float is dramatically higher than the average IPO” (Osipovich & Farrell, 2018).
On April 3rd, 2018, the company made its official IPO at $169.90 per stock ("SPOT |
Spotify technology S.A. Stock price & news," n.d.), higher that the above descripted private
sales, and evidently higher than the average IPO; SPOT’s stock price closed that day in $147.92
("SPOT | Spotify technology S.A. Stock price & news," n.d.). SPOT’s stock price closed 2018
with $113.74 ("SPOT | Spotify technology S.A. Stock price & news," n.d.), which is slightly
lower than the IPO. The company has been able to maintain consistent stock prices throughout
the past 2 years, even with the unusual IPO, leading other companies to follow their methods on
entering into the public market. When Slack Technologies Inc. was planning on going public in
2019, there were rumors that Slack was going to follow the untraditional IPO that SPOT initial
stock price set, even though a the moment their stock price was 17% lover than its IPO (Farrell,
2019). This would make Slack the second big technology company to bypass an untraditional
IPO.
As of Wednesday, Nov. 18, 2020, SPOT closed with a stock price of $253.02,
significantly higher that the company’s IPO. According to Anne Steele, a writer for the WSJ, due
to the current health emergency that the world faces, and thank to the magnificent and worldwide
user database SPOT has, costumers are spending more time listening to media offered by SPOT
(Steele, 2020). In moments like this, major software companies like SPOT will gain more users,
generating more income that will make the company more attractive to investors.
Even though SPOT IPO speculations were not precisely accurate, they were not far from
the actual IPO. Since investors and professional already had an idea of what SPOT was selling
their private stock for, they were able to estimate and forecast a very specific amount; however,
forecasts are not always right, even when there are valid precedents to base any assumption on,
especially when it comes to finances. SPOT is now one of the biggest media streaming platforms
with currently more than 138 million paying subscribers (Steele, 2020). Even though many
companies in different industries are being negatively impacted by the current health-related
world crisis, SPOT had been able to succeed and even see an increase in their stock price through
2020. Christians, even in the middle of crises, should understand that in Christ even the things
that might look like negative things to the world, should work to their good, just like the Apostle
Paul wrote in the book of Romans (ESV, 2001). Understanding this principle is the key for
everyone to have a better perspective of the world, and have a better attitude towards the
difficulties live could bring.
References
Farrell, M. (2019, January 11). Slack plans to follow Spotify on unconventional IPO route. WSJ.
https://www.wsj.com/articles/slack-planning-to-pursue-direct-listing-11547202723
Osipovich, A., & Farrell, M. (2018, April 1). How Spotify’s unusual first day of trading will play
out. WSJ. https://www.wsj.com/articles/how-spotifys-unusual-first-day-of-trading-will-
play-out-1522587600
Romans 8. (2001). ESV Bible. https://www.esv.org/Romans+8/
SPOT | Spotify technology S.A. Stock price & news. (n.d.). WSJ. https://www.wsj.com/market-
data/quotes/SPOT
Spotify — Company info. (2018, October 19). Spotify. https://newsroom.spotify.com/company-
info/
Steele, A. (2020, October 29). Spotify recovers from early-pandemic slump. WSJ.
https://www.wsj.com/articles/spotify-recovers-from-early-pandemic-slump-11603965605
Steele, A. (2020, July 29). Spotify’s listening audience increases after pandemic slump. WSJ.
https://www.wsj.com/articles/spotify-loss-deepens-despite-subscriber-podcast-growth-
11596016801
Caleb,
Frist, I want to mention that it was very clever from you to select Zoom as your company
to evaluate for this assignment. According to your post, I do see that Zoom’s initial public
offering (IPO) is more in the slightly above-average IPOs. According to an article form the Wall
Street Journal (WSJ), the average IPO in 2019 was $50 billion (Farrell, 2019). The article later
on mentions how Zoom’s stock price, later on 2019, was 80% above their IPO back in April
2019 (Farrell, 2019). In my opinion, I think this looked very attractive to investors, leading them
to capitalize in the company, and eventually bring the stock price higher and higher through the
year.
Additionally, you also mentioned that because the company was undervalued, leading
Zoom to lose funds. Then you mentioned that the excitement Zoom’s IPO could have possibly
overvalue the company. Even though I do not see a strong reason to lean towards whether I
believe the company was under or overvalued, I believe that in both cases the company’s funds
would be affected.
Furthermore, I think we all can imagine how great Zoom is doing since the pandemic
started. The word “zoom” is almost part of the world’s most used word in any vocabulary in
almost every language at this point, since companies, institutions, schools and universities, and
many others, use Zoom as their primary tool of communication, especially because of the free
services the company offers (Tilley, 2020). Obviously, this could be a great opportunity for
investors to take and capitalize from it. However, as you mentioned, the company has had a 52-
week low, possibly because of factors like people going back to work in-person. Looking at this
perspective, I can definitely see this as an unattractive opportunity for investors due to the
temporal high spike the company had.
Finally, I would like to reflect on the comparison with Zoom’s IPO to the current market
price. There had been a big change between the company’s IPO and its current price, for the
better in my opinion. I would agree in the fact that initial investors that were able to not waste
any time and immediately buy shares in Zoom have been gratefully benefited from that action.
The Apostle Paul tells us in the book of Ephesians that we should make the best use of time,
because, as He said, “the days are evil” (Ephesians 5:16, ESV, 2001). Even though I do not
necessarily think the Apostle indeed judged days as “evil,” I do think He meant to say that if we
live our lives wasting the precious time, and not taking the opportunities God places in our path,
as the time and the days goes by, we will start to feel like the “days are evil” or against us,
because we did not take the right choices. I believe that early Zoom investors did the right thing
in buying.
References
Ephesians 5. (2001). ESV Bible Online. https://www.esv.org/Ephesians+5:15;Ephesians+5:16/
Farrell, M. (2019, December 29). 2019: The year of IPO disappointment. WSJ.
https://www.wsj.com/articles/2019-the-year-of-ipo-disappointment-11577615400
Tilley, A. (2020, November 3). Zoom video tackles tricky role of policing its service. WSJ.
https://www.wsj.com/articles/zoom-gets-drawn-into-debate-about-policing-content-a-big-
thankless-job-11604408401
Aimeng,
Let me start by saying that you made a very interesting selection by choosing Beyond
Meat as your company to evaluate their IPO. I strongly believe that we will see the vegan and
ecofriendly industry grow more and more within the next upcoming years, not only due to its
popularity, but also because of the great benefits it has to the environment. I can definitely see
how the company’s vision is way beyond feeding people that have a specific dietary believe, and
instead is creating a movement that recent generations are taking ownership on, which ultimately
generates profit to the company.
First of all, I think it is amazing to see a company like this have the triumph that they
have had. I was reading a Wall Street Journal (WSJ) article that says that the company’s IPO was
$25 per share, and that the first day they closed in $65.75, which means a 163% raise in one day
(Mack & Gormley, 2019). You even commented that a company that had some ownership in
Beyond Meat decided to sell their ownership and launch their own plant-based products. With
the success Beyond Meat had their first day, it is very understandable that a company sees that as
an opportunity to partake in that market. I believe investors were extremely attracted by the
magnificent opportunity Beyond Meat represents to the current generation, and decided to take
on and buy shares, even though the company filed a deficit in prior years as you mentioned in
your forum submission. Sometimes numbers just represent numbers, and not necessarily
consumers future behaviors, which represents future sales and profit to the company.
In addition, I find it very interesting that Beyond Meat has reported increases in sales
during the current health emergency the world is facing. According to a WSJ article, this is due
to the fact that the pandemic has inspired people to do food stockpiling, yet filings still report a
net loss (Maidenberg, 2020). Whether the reason to this is bad internal management of the
company, or financing more research than usual to generate new products using the company’s
cash flow, I believe that there is a need to make wise decisions to be good stewards to the
resources one makes. On the other hand, I do see that Beyond Meat has had a very positive social
responsibility as a motive to their product development. Adding to this, the Bible teaches us that
we should seek our neighbors’ good. The Apostle Paul wrote, “Let no one seek his own good, but
the good of his neighbor” (1 Corinthians 10:24, ESV, 2001). I strongly believe that looking after
the people’s well-being will bring many rewards to those involve; and to the company,
developing a reputation of caring and responsibility will eventually strengthen the finances of the
company.
References
1 Corinthians 10. (2001). ESV Bible Online. https://www.esv.org/1+Corinthians+10/
Mack, H., & Gormley, B. (2019, May 2). Beyond meat shares soar in NASDAQ debut. WSJ.
https://www.wsj.com/articles/beyond-meat-doubles-share-price-in-early-trading-
11556814585
Maidenberg, M. (2020, August 4). Beyond meat reports stronger demand as pandemic inspires
food stockpiling. WSJ. https://www.wsj.com/articles/beyond-meat-reports-stronger-
demand-as-pandemic-inspires-food-stockpiling-11596574804
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