Spotify’s shares are expected to list on the NYSE during the week of April 2, and the company is taking a bit of a different approach in doing so. While most companies that list often do so through a formal IPO process, Spotify is instead opting to use a direct listing approach that will see the company not sell any new shares. It has also decided to not hire investment bankers to help underwrite the stock issue either, which could make the stock price even more volatile in early trading.
In recent years, if it’s one thing we’ve seen from new tech stocks, it’s been unpredictability. Snap Inc (NYSE:SNAP) had a lot of hype about the stock right out of the gate and initially investors were very bullish about the company. However, as concerns came about that the user growth wasn’t as high as expected and perhaps was even inflated, the stock would go on to tumble and has failed to return to the highs it reached in its early trading days.
Twitter Inc (NYSE:TWTR) followed a similar path when it soared soon after issuing its IPO to heights not seen since. Facebook Inc (NASDAQ:FB), however, made a different path for itself. Initially, the stock was off to a very poor start and incurred some heavy losses early, but has since quadrupled in price.
When it comes to new listings, investors should expect a lot of volatility and uncertainty. There’s no guarantee that a stock is always a good buy or a bad buy in its early trading days as there are too many factors and variables that can impact the share price.
