How To Buy Spotify Stock
Welcome to Trading Brokers step by step guide to buying Spotify stock. Here you will find an easy to understand explanation of trading Spotify stock. This includes how to buy Spotify shares online, what you need to trade Spotify stock and how to open a trading account with a stock broker so that you can buy Spotify stock online today.
Maybe you have heard of buying Spotify stock online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to buy Spotify stock can help you along your journey.
Overview of Spotify
Spotify is a Swedish media platform that provides audio streaming and media services to its customers. Spotify Technology S.A is the holding company of Spotify AB which owns the Spotify platform. Daniel Ek and Martin Lorenzton founded the Spotify platform on 23 April 2006, in Stockholm, Sweden. The company’s headquarters is also located in Stockholm, Sweden.
Spotify owns about 47% shareholding in Tencent Music, a music streaming service for the Chinese market. Spotify pays about 70% of its revenues to the right holders of the streaming music. The Spotify platform is available for users of all operating systems and devices. Users can use the platform on Android, iOS, Windows, MacOS, smartphones, and tablets, etc. The main competitors of Spotify include Apple, Google, and Amazon.
Spotify Technology S.A Stock
The holding company of Spotify’s parent company, Spotify A.B, is listed on the New York Stock Exchange. The symbol of the company’s scrip is SPOT. The company went public on April 03, 2018, through a direct listing on NYSE.
What moves the stock price of Spotify Technology S.A Stock?
Several factors can influence the stock price of Spotify. Each stock is unique and has its own fundamental and technical factors, which a trader or investor should note before trading the company’s stock. However, we can identify some major stock movers that can fluctuate the share price of Spotify. Some of these factors are discussed below:
The company has acquired many companies over the years and has benefitted Spotify to increase its operations and increase its subscribers base. Any big and market disruptive acquisition by Spotify can cause a big jump in the share price of Spotify.
Licensing Agreements with Artists
Spotify often signs licensing agreements with artists to stream exclusive content on its platform. In May 2020, Spotify entered into a multi-year podcast licensing agreement worth $100 million with an American comedian Joe Rogan. The stock price rose about 7% following the news of the agreement. Such agreements that have the potential to increase the revenue and subscriber base of Spotify can move the stock price upward and vice versa.
Change in Premium Services Revenue
Spotify earns about 90% of its revenue from its premium services. Any event that can have an impact on the number of premium services subscribers can drive the price of its share upwards or downwards. An investor should continuously monitor the key numbers to ascertain the revenue and profitability of the company before investing in the company.
Spotify has strong rivals like Google, Amazon, and Apple, with each competitor having a device preloaded with its own streaming service. Spotify, on the other hand, doesn’t have a mobile device where it can preload its streaming platform to increase its subscribers. Therefore, any big move by its competitors can cast a negative impact on the share price of Spotify. Conversely, any negative development for Spotify competitors that can give an advantage to Spotify can shift the stock price of Spotify upwards.
Earnings reports have crucial information about the company’s operations and its financial health. The reports often contain important commentary by the CEO and directors of the company. Therefore, positive earnings reports that beat the analysts’ estimates can lead to a significant rise in the share price of Spotify. Conversely, a disappointing earnings report can dampen the investors’ sentiments and lead to a plunge in the share price of Spotify.
Investors should carefully read the future projections of the CEO and directors to ascertain the direction and plans of the company to get an idea about the future movement of the stock. Usually, timelines for big future projects are announced in the commentary by CEO and directors, which could be beneficial to gauge the direction of the stock.
Many other factors can also influence the stock price of Spotify. An investor should, therefore, keep vigilant of any developments occurring in the audio and media streaming industry to effectively determine the impact of the development on the stock price.
Investing in Spotify
Investing in Spotify stock is when you buy Spotify shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy Spotify stock in order to try and make a profit when the Spotify stock price increases in value.
Trading Spotify stock
Trading Spotify stock is when a trader speculates on the movement in the Spotify stock price without actually owning the shares in Spotify. Traders tend to buy and sell Spotify stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell Spotify stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
One of the most popular ways to trade Spotify stock is via CFDs (contracts for differences). When trading Spotify CFDs, you do not actually invest in Spotify shares, meaning you are not tied to them. You are only speculating on the rise or fall of the Spotify stock price. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.
A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with their own personal objectives. Traders would open long (buy) positions, if they think the stock price of Spotify will rise or short (sell) positions if they thought that the Spotify stock price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, if you think Spotify shares are going to increase in price, you could buy a share CFD on the company. You will exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares increase in price and making a loss if they decrease in price.
On the contrary, if you think Spotify shares are going to decrease in price, you could sell a share CFD on the company. You will still exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares decrease in price and making a loss if they increase in price.
Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. Spotify investors can use futures trading to speculate on the price movement of Spotify stock in order to try and make a profit. Traders would look to go long (buy) a futures contract if they believe the price will rise or short (sell) a futures contract if they believe the price will fall. The difference in price between the price at the start and expiry date of the futures contract is the profit or loss from the contract.
Spotify spread betting
Spread betting is a financial derivative that enables traders to speculate on Spotify stock falling or rising without taking ownership of the underlying asset. If the trader makes a correct prediction and the asset does move in that direction, they could make a profit, minus any broker fees. On the other hand, if the price moves against their prediction, they would incur a loss.
Financial spread betting is similar in ways to CFD trading except that you are betting a fixed amount per point on the Spotify stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
Spotify options are financial instruments that are derivatives based on the value of Spotify’s stock. Traders usually enter into calls when they expect the price of the underlying asset to increase, and puts when they expect the price to decrease. Option contracts come with an expiration date before which the holder needs to exercise their option to buy or sell an underlying asset at an agreed-upon price. The stated price on an option is known as the strike price.
Buyers can choose to exercise their calls and puts or not whereas sellers are obligated according to the buyer decision. Therefore, the sellers (writers) can be exposed to more risk than buyers whose losses can be limited to the premium paid for the contract in the instance they do not exercise the contract. On the other hand, sellers could lose more depending on the Spotify market price.
Exchange Traded Funds (ETFs) enable traders to invest in a basket of securities that trade intraday like individual stocks on an exchange, and are typically designed to track the performance of an existing market or group of markets.
Each ETF is usually focused on a specific sector, asset class, or category. ETFs can be commonly used to help diversify an investment portfolio and create a mini-portfolio, or, for the active trader, they can be used to try and take advantage of price movements.
Spotify is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside Spotify, may consider ETFs.
Where to buy Spotify stock?
Stock trades are processed via a stock exchange, where a stock broker represents each investor. The majority of investors will nowadays use an online stock broker to buy and sell stocks through a stock trading platform which will enable them to connect to the stock exchange. You can see a selection of our best stock brokers below with whom you can open an account to trade stocks online.
ASIC, BVI, CBI, FFAJ, FSA, FSCA
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Why trade Spotify stock?
Trading the stock market has become a popular investment activity for many people, especially with the technology that we have these days making it more accessible than ever. There are a vast number of trading brokers, trading platforms and trading apps available for buying and selling Spotify stock with relative ease. The cost involved to get started makes trading Spotify stock accessible to traders of all experience levels from across the globe.
The availability of leverage has also contributed towards the increase in aspiring traders. Leverage allows traders to hold a position size greater than they would have been able to without it. E.g. An account balance of $1,000, could take a position size of $5,000 with 1:5 leverage. Whilst this can increase potential profits, it also greatly increases risk. It is therefore of the upmost importance that you have a clear understanding of the significant risks involved with online trading, especially when using leveraged positions.
The majority of traders would look to buy and sell Spotify stock to try and earn profit from the variation in Spotify’s stock price. When trading Spotify CFDs you can speculate long and short on prices rising or falling without actually needing to invest in Spotify shares. This can make it a more convenient trading method for anyone who has a trading account with an online broker. Alternatively, long term investors may purchase traditional shares in Spotify’s stock for a more long-term hold.
Buying Spotify stock can also be a way to diversify a trading portfolio and to hedge against shares in other stocks or investments in other asset classes such as forex, commodities, precious metals and cryptocurrencies.
However, before investing in Spotify, it is important you understand the dynamics that affect the Spotify stock price.
How to trade Spotify stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade Spotify stock online. Here is a summary of the key steps:
1. Decide if trading Spotify stock is for you
Trading Spotify stock online carries an element of risk and can take more time than other forms of investing. You will need to research the company, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading Spotify stock online.
2. Educate yourself
Before trading Spotify stock, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online brokers that can help you to improve your trading skills and knowledge.
Most brokerages will also provide a free demo trading account so that you can practice trading Spotify stock online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose a Spotify stock broker
In order to trade Spotify stock online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.
4. Research Spotify
If you have made it this far then you may be ready to start trading Spotify stock online! The next step is to research Spotify to help increase your knowledge in the company. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have a trading plan
Some of the most important factors that can help determine Spotify stock trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell Spotify stock
Once you feel ready to trade Spotify stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on Spotify, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of Spotify trades for the long-term, whereas traders may buy and sell Spotify stock on a daily basis.
Is trading Spotify stock right for me?
Trading Spotify stock is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.
However, it is important to understand the significant risks involved with trading Spotify stock online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade Spotify stock and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most stock brokers provide unlimited demo accounts free of charge.
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