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How to buy Spotify shares (SPOT)
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This guide gives you all the information you need to know about Spotify before making an investment. We explore the stock market in general, a brief history of Spotify, the latest news related to the company, and the best place to buy Spotify stock.
Compare the best Spotify trading platforms
If you are trying to find where to buy Spotify shares online, look no further than the options below. We’ve assessed all the best brokers and compared them so that picking the right choice for you is quick and easy. If you’re not ready to invest yet, keep reading for more information on Spotify.
How to buy Spotify stock, a step-by-step guide
This process is simple, so don’t worry, even if you’re new to stock investing. These are the steps to follow in order to complete your investment:
- Choose a broker. To get started, you will need to use an online brokerage platform. There are many different options to choose from, each with its own unique benefits and drawbacks. The comparison table above can help you select the right broker for you, and you can head to our comprehensive broker reviews if you’re still unsure.
- Create an account. Once you’ve selected your broker, simply go to their website and create an account. The steps required for this will vary from platform to platform, but generally, you can expect to have to provide your name, email address, phone number, and some form of photo identification.
- Deposit funds. Log into your broker account and select the option to deposit funds. Depending on your broker you’ll have a variety of payment options available; most brokers accept bank transfers and debit card payments, but not all accept e-wallets such as PayPal. Select your preferred payment method and deposit the amount of money you wish to invest in Spotify shares.
- Place an order for SPOT stock. Now navigate to the stocks page on the interface of your chosen broker. Here you’ll be able to search for Spotify’s ticker symbol (SPOT) and see the current price at which the stock is trading. If you’re happy with the price, enter the number of shares you wish to purchase and place your order.
- Execute your order. Once you have placed your order, your broker will automatically execute it for you and your Spotify shares will be listed in your account. Congratulations, you’ve just bought shares in Spotify! Explore the Invezz website for more information on the stock market.
What is Spotify? And should I invest?
Spotify (NYSE: SPOT) is an audio platform and the world’s largest music streaming service. Spotify began by focusing on music but is expanding its audio content with a series of acquisitions and by signing up new talent. Spotify was formed by Daniel Ek in Sweden in 2006 but came to international prominence in the 2010s, before going public on the New York Stock Exchange in 2018.
Spotify currently dominates the music streaming market, with far more overall subscribers than Apple Music, its main competitor, but it has struggled to turn that dominance into profit. Primarily, this is because it’s forced to give up a high percentage of revenue to music labels and in royalties. In recent years, it has been expanding into other forms of audio streaming to try to increase revenue outside of its traditional music domain.
Spotify is part of the swarm of tech firms that have done extremely well in recent years, but it trades at a lower price than the likes of Netflix. Partly that’s because of its business model and royalty obligations, which have restricted its ability to maximise revenue. As it diversifies its output and strengthens its advertising, it might have much more room to grow. Spotify’s value soared in 2020, but it could still make a good investment if it can find ways to improve its revenue stream and increase subscribers even further.
How has the company performed in recent years?
Spotify more than doubled in price during 2020 after struggling to convince investors for a couple of years following its April 2018 IPO. It went into 2020 trading at $150 and ended the year at $350. As with the likes of Netflix, investor confidence, and thus its share price, has been affected by its subscriber growth. The pandemic caused a surge in the number of people using the service, and Spotify’s price rose with it.
Until the post-pandemic boom, Spotify hadn’t been able to push much beyond its initial IPO price. In fact, it fell all the way to $106 at the end of 2018 and almost as low a year later as it battled a broader run against tech stocks and came under pressure from competitors, most notably Apple, elbowing onto its music streaming turf.
With limited scope to increase its revenues from music alone, Spotify spent 2019 and 2020 snapping up other media outlets. It acquired the podcast services Anchor and Gimlet, the pop-culture site The Ringer, and signed high-profile names like Michelle Obama, Kim Kardashian West, and Joe Rogan. With its promise of alternative revenue streams, the new strategy helped boost Spotify’s value before the pandemic. However, it was the big culture shift towards working from home that inspired its jump in subscribers and price in 2020.
Is it a good time to buy Spotify shares now?
Spotify is trading near its all-time highs, so the decision on whether to invest depends on how well it can improve revenues and expand into new markets. It benefited from a surge of new subscribers during the pandemic, so the question is how well it can translate this boost into established profitability. This is particularly true for investors with a long-term view, as similar tech stocks have fallen when subscriber numbers don’t match up to investor expectations.
Under pressure from Apple Music in the US, Spotify wants to use emerging markets to expand its customer base. It has already had success in Latin America with targeted playlists drawing in new users. The main challenge for Spotify beyond increasing subscribers is finding ways to increase its revenues from audio streaming beyond the music.
It’s betting on podcasting, acquisitions, and changing the way it advertises to increase that revenue. It wants to draw in more users and profit from them without giving up so much of the money to music labels. Signs of success for this strategy would be an increase in premium subscribers and higher advertising revenue. This could be more important for its long-term prospects than subscriber numbers alone.
In a broader sense, another positive sign for Spotify’s prospects would be growth in the podcasting industry as a whole. Although it has grown exponentially in recent years, it’s still a relatively small industry. If it continues to expand, Spotify has put itself in a good spot to benefit from the expansion and turn its market share into revenue.
Investors should keep track of the wider market trends, as well as news of Spotify signing up more big-name podcasters with name recognition or an established listener base. For short term traders, the aftermath of subscriber announcements can offer more volatility and opportunity in the share price. You can see the latest Spotify share price below, along with all the news and market analysis.
Spotify stock price explodes 15% on new deals with Kim Kardashian, Warner Bros. and DC Entertainment
Buying, selling and trading shares for beginners
What to do before buying shares
You should always take the time to research a stock fully before investing your money, especially if you haven’t bought shares before. The more knowledge you have, the better your chances of making a wise investment.
With that in mind, here’s a checklist to run through before investing in Spotify shares.
- Research the company. You should always examine the fundamentals of a company before investing. What is Spotify? How did the company get its start? How did it grow? Is Spotify’s revenue and profit growth picking up? Is the company innovating? The more you know about Spotify, the better positioned you’ll be to make smart investment decisions.
- Make sure you understand the basics of stock investing. Before you start trading on the stock market, make sure you have an understanding of how it works. This will ensure that you have more clearly defined goals and have thought through how you will achieve them.
- Decide between share dealing and CFD trading. Choose the type of investment strategy you want to pursue, and make sure you have carried out the necessary fundamental or technical analysis for share dealing and CFD trading respectively.
- Set the size of your budget. The golden rule of investing is never to risk more than you can afford to lose. Not every investment you make will result in a profit, so it is important to set a budget that not only allows good potential for capital growth, but also protects against overly damaging losses.
- Find the right broker. Individual brokers each have their own pros and cons. Some will have low fees but have a user interface you struggle to understand, whereas others may be a bit more expensive but come with a range of features that you want to take advantage of. We’ve reviewed all the top brokers to help you find the right platform.
- Examine broader market conditions. No stock exists in a vacuum, and it’s always important to analyse the general trends of the stock market as a whole before investing. If a bear market is setting in and stock prices are falling, it’s best to wait it out and invest your money later when the stock is cheaper. If, however, the market is looking bearish, you’ll want to make your investment quickly to get the maximum benefit from rising stock prices. Our latest news section can help you keep on top of movements in the financial markets.
What is the difference between buying, selling, and trading shares?
If you’re new to stock investing, then it’s important to understand the basics of how to buy, sell, and trade Spotify shares. Here’s a quick run-through of what’s involved in each.
This process involves finding a broker and placing an order for Spotify stock, as outlined in the steps further up this page. Ideally, you want to time your investment when the stock’s price is low so that you can profit by selling the shares after they increase in value.
When you sell any Spotify shares you have bought, you’ll want to do so at a higher price than the one at which you bought to earn a profit.
When you sell is up to you. You might decide to hold for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that Spotify’s stock is already up a lot compared to the price you bought it and you’ve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.
Trading is the same process as buying and selling shares, it’s just done over shorter periods of time with the aim to make small profits on a regular basis. This means that you can make money faster and spend your profits in your day-to-day life – however, on the other side it means you can lose money faster as well. For inexperienced investors, we generally recommend making investments for at least 6 months to a year instead of making trades in quick succession.
You can trade Spotify shares outright or use CFDs. These allow investors to speculate on stock prices and trade with leverage in pursuit of bigger gains. CFDs trading is explained further in the next section, but it is worth noting that beginners should avoid trading with leverage. It comes with large risks and is best left to experienced investors.
Share dealing vs CFD trading
When it comes to investing in any stock, the two options you have are share dealing and trading. Which one of these methods to opt for largely depends on your investment timeline, with investors thinking long term tending to go for share dealing, and those looking for short-term gains pursuing a more aggressive trading strategy.
Here’s a quick summary of the two approaches, and the pros and cons of each.
Share dealing refers to the practice of holding shares in a particular company over the long term. When investing like this, you’re seeking to profit either from dividend payments or an increase in the stock’s price over time.
When investing your money this way, it is important to do a thorough fundamental analysis of the company in which you are investing. You want to put your money in a stock you believe will trend upwards over time, even if there is some market volatility along the way, rather than get distracted by shorter-term peaks and troughs.
- Can build wealth over time to achieve financial goals
- Don’t need to be very reactive to short-term market movements
- Some stocks will give you an income through regular dividend payments
- Takes a long time to realise any profits
- Your capital is tied up in stocks and cannot be used for other investments
If your aim is to generate profits in the short term, then you might be better off trading shares than holding them in your portfolio. Stock trades like this are executed using CFDs (contracts for difference), which allow investors to trade against the value of a stock without having to take ownership of it. When CFD trading, investors are looking to buy and sell stocks fast to profit from short-term fluctuations in value.
One aspect of CFD trading that many investors find attractive is that they allow you to trade with leverage. This means you can place large trades while only putting up a fraction of the value yourself – for instance, if a platform offered leverage of 1:10, you could put £10 into SPOT shares and be able to trade £100 worth. This can maximise profits if the market moves in your favour, but be careful as it can also lead to heavy losses.
When trading using CFDs, it is key to be skilled at technical analysis and reading stock price charts. As you’re trading stocks quickly and frequently, the fundamental strength of the company in which you’re investing isn’t as important as being able to predict how its stock price will rise and fall minute-by-minute.
- Can generate fast profits if you read the market right
- Some platforms allow you to trade with leverage
- Prevents your capital being tied up so you can take advantage of investment opportunities
- Trading with leverage is risky and can lead to big losses
- Doesn’t necessarily generate growth over the long term
Consider which approach suits you best and craft an investment strategy that works for you. If you need more information, you can take our stock trading course and read our guide to CFD trading to get you up to speed.
If neither of these options appeal to you, then you can find a variety of other ways to invest in SPOT stock on this page. If, however, you’re ready to get involved now, simply select one of the brokers in the table above and get started.
How to choose a broker
With the wide variety of online brokers available these days, it can be hard to figure out which is the best service to go with. Our comparison table and in-depth reviews can help you cut through the noise, but by and large these are the aspects you should be considering when selecting a broker:
- Range of stocks available. The most important thing is that you can actually use the broker to purchase the shares you’re looking for. Some brokers offer more stocks than others, and many will allow you to trade other assets, such as forex and commodities.
- Fees and commissions. You want to keep as large a chunk of your profits as you can, so it’s important to make sure your broker doesn’t charge high fees that can eat into your profits.
- Regulation. You should only use regulated brokers to place trades and purchase shares. Unregulated brokers can be risky and offer little to no protection if the business were to fail while you had funds in your account.
- Payment methods available. You might want to use a specific payment method, such as PayPal. Not all brokers accept every payment method, but by using our comparisons, you can search for the brokers that support the option you’re looking for.
- Reputation. One of the strongest indicators of a broker’s reliability is the reputation it has with the customers who have used it. Brokers are online businesses, and as such many user experiences can be found online. You can check these out in addition to our reviews to make sure you choose the right platform.
- Customer service. As you’re going to be investing your money using the platform, you want to check that the broker offers good customer service in case you have a query or something goes wrong.
Latest Spotify news
Is Spotify stock a ‘buy’ after the Q2 report this morning?
Spotify vs Netflix: Mark Mahaney picks a side
Spotify stock price could drop below $100 despite earnings jump
Spotify sinks 20% on disappointing guidance for subscriber growth
Spotify reports £110 million of net loss in the fiscal fourth quarter
Joe Rogan ditches YouTube for Spotify, shares gain 8%
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Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >