Spotify is gearing up to go public as the media industry continues to evolve and big tech companies expand products and services. Read more about the changes here.
Spotify is expected to go public sometime in March or April. Since its founding in 2006, it has grown to become the largest dedicated music-streaming service with a valuation of $19 billion, according to Reuters. Its growth has coincided with an evolution in the ways the public consumes media as some of the biggest tech companies in the world have continued to expand and evolve in the industry.
The number of consumers foregoing physical media purchases, and opting for streaming services instead, has accelerated in recent years.
One of the factors that has likely helped to speed up the transition is the availability of streaming services. Over the years, there have been many new startups launched in this space. At the same time, existing companies have evolved through mergers, acquisitions, and have developed their own competitive offerings. Most of these businesses didn’t even exist 20 years ago (see timeline below), or they were just starting out. Over time, they’ve grown to become some of the largest companies in the world, increasingly overlapping as they pursue similar opportunities:
Before Netflix launched streaming services and it was just a mail-order DVD company, Blockbuster’s CEO turned down the opportunity to purchase it for $50 million in 2000. Looking back, there are plenty of other similar stories. Many started out as small-cap companies operating at a loss, taking them many years to become profitable.
Like the management that turned down these offers, investors are faced with a similar challenge when it comes to making the decision of including these companies in their portfolios. Since no one knows how industries are going to evolve, or which companies will navigate growth (or lack thereof), and change successfully. So, what can you do?
“Listening to earnings calls and reading through company’s quarterly results can give you an idea of the path that management is on,” said JJ Kinahan, Chief Market Strategist at TD Ameritrade. “Not only does this practice help you monitor your current portfolio , but it could also give you investment ideas to look into.”
There’s lessons to be learned in both good and bad investments. Maybe one of your current investments is tanking, but what’s causing it? How are consumer behaviors adapting and what companies are working to meet those needs? The winners of today won’t always be the winners of tomorrow. Just look at how many of the original components of the Dow Jones Industrial Average are still around… only 1.
To learn more about the rarely used way that Spotify is planning to go public, called a direct listing, check out this article on the Ticker Tape.
TECH AND THE EVOLUTION OF MEDIA.
As Netflix (NFLX) and Spotify grew into multi-billion dollar companies, the largest tech companies in the world continued their push into media. This timeline covers some of the changes in the space as tech and media continue to evolve.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other's policies or services.
Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2019 TD Ameritrade.