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Comment by tw1010 | Hacker News Reader

If you'd have to bet, do you think it's going to go significantly up or down within the first few days?

At the risk of turning into r/wallstreetbets here. My bias is to the downside. Driven by a cacophany of pundits on CNBC post-IPO with negative outlooks. "There is absolutely no money to be made in streaming music on the internet" and "apple isn't into music for the profits" and so on ad infinitum. As well as significant short interest in the options market.

$SNAP is probably as nearest neighbor as any for price-action historical context.

Market timing (H1 2019) may also be ill-favored generally for anything tech related if we see significant correction.

But I certainly hope I'm wrong. And will be looking to add positions in Spotify, Dropbox, Uber, Lyft, Docker, Snowflake, AirBnB, SpaceX, WeWork, Stripe etc if and when they become available ;)

Docker?

Well, that all depends on what the opening trade is!

I think taking either side of this bet would be foolish. You can usually (but not always!) bet on a Day 1 bump for a normal IPO, but there's no historical data for a direct listing of this size, and Spotify might overprice it just because, hey, why not, they get more money and without underwriters the strong incentive to underprice disappears.

If you're not working for a huge bank, stay away from this until it stabilizes.

> Spotify might overprice it just because, hey, why not, they get more money and without underwriters there are no clients to disappoint

Spotify isn't pricing it, they aren't even selling shares. The initial pricing will come directly out of the order book whenever it lists. It's really unusual. Read the plan of distribution section:

https://www.sec.gov/Archives/edgar/data/1639920/000119312518...

Presumably they'll still have an initial Ask price though? Unless I'm misunderstanding something.

I guess it depends on whether they're issuing new shares, or just allowing the trading of any existing shares already held by people.

Spotify is not issuing new shares so they will not have any price to set. It's up to the "Registered Shareholders":

> The Registered Shareholders may sell their ordinary shares covered hereby pursuant to brokerage transactions on the NYSE at prevailing market prices at any time after the ordinary shares are listed for trading thereon.

Plus:

> prior to the opening trade, there will not be a price at which underwriters initially sold ordinary shares to the public as there would be in an underwritten initial public offering

As I said, this should be fun to watch!

Sounds like the company won't. Whoever places the first sell order on the exchange will get to determine the ask price.

I would guess that without an established price there will be a very large buy-sell spread to start that will eventually converge at a price as people lower their sell bids and raise their buy bids.

If Spotify isn't selling, how would an initial ask price work?

"We'll give you a share for $20"

"I'll take it!"

"No, we're not selling"

From the document:

> Unlike an initial public offering, the resale by the Registered Shareholders is not being underwritten by any investment bank. The Registered Shareholders may, or may not, elect to sell their ordinary shares covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made through brokerage transactions on the New York Stock Exchange (the “NYSE”) at prevailing market prices.

So essentially early investors will be the ones [potentially] selling. The pricing should be highly volatile.

But what if NONE of the early investor wants to sell? So there are no shares afloat? Or until a ridiculously high price before they start selling?

Let say it is valued at $20B with shares at $20. What is stopping an early investors selling 1 shares at $1000, market valued at 1 Trillion, and get someone to buy that 1 shares?

My point is since there is no new shares, unless the early investor are really rushing to offload. Selling would be limited.

Yes, that is possible. Though I assume they're going through this process because investors have wanted to sell their shares.

Morgen Stanley is doing the book collection prior to open, so it's almost underwritten. It will be subscribed, either way.

From the document...

> because Morgan Stanley is not acting as an underwriter, it will not have engaged in a book building process, and as a result, it will not be able to provide input to the DMM that is based on or informed by that process

You're totally right, my bad. I read it as ".. as a financial advisor to be available to consult AS the designated market maker" - thanks for pointing that out. :)

WAY up.

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