Baby boomers have long dominated America’s investing landscape, but that will change as the larger millennial generation takes over from the ageing population.
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This new generation has different tastes in terms of investments versus their boomer parents, and companies are looking at ways to attract this new group of financial leaders to their stocks.
In the age of Facebook and Twitter, millennial investors have an affinity for tech. But, after being burned by a disappointing Snap (SNAP) IPO, will they pour money into the Dropbox and Spotify IPOs?
Two highly-anticipated IPOs, the first major tests since Snap, are coming up. Dropbox, a file hosting service, will make its trading debut on Friday.
Spotify is scheduled for its first day of trading on April 3, and the company is differentiating itself right out of the gate. Spotify, which offers a music-streaming service, plans on eliminating banks as underwriters in a move that some are calling a “non-IPO.” The company will list directly on the New York Stock Exchange under the ticker symbol SPOT, removing the underwriters from setting an initial price, linking sellers and buyers and providing cash to stabilize the stock.
Spotify paid just $30 million to Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. who will provide some of the traditional tasks of an investment bank, but in a less prominent way. This could be a major shakeup to Wall Street, with investment banks losing out on what is a lucrative business.
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Last year, investors were burned when Snap went public. While shares rallied out of the gate they later flopped. Shares are currently trading around $16. The company debuted at $17 per share but quickly shot up 44% on its first day of trading before falling. Now, it’s up to Dropbox and Spotify to prove that investors still believe in the lofty valuations of new tech companies.
According to Reuters, on Wednesday Dropbox raised the price range for its initial public offering by $2 on “strong demand.” The new price range suggests the company could have a market capitalization of up to $8.7 billion and the IPO could raise up to $720 million.
The performance of the Dropbox IPO will be an important prelude to the Spotify offering. According to Dealogic, 37 IPOs raised $12.5 billion in 2017, a significant increase from the 26 that raised $4.3 billion in 2016.
