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How to buy
For those who live in Australia, a great way to invest in Spotify shares is, definitely, this popular broker.
eToro*, one of the main brokers around the world, is registered and licensed, among others, by the Australian Securities and Investments Commission (ASIC).
We recommend eToro because you can create an account for free with this broker, and its fees for trading online are very low. Besides, eToro is available in our language, accepts users from Australia, it is really easy to manage, and its friendly interface is ideal for those who are starting to trade with cryptocurrencies and stocks.
How to sign up, step by step
The first thing you need to do is click here and fill in the fields on the right: enter your name, email, and set a password.
Now check your email inbox: you have received an email from eToro, click on the button and your account will be verified.
Once on eToro, you just have to click on “Deposit funds”, in the page menu.
There, you can choose how much money you want to add to your account (the minimum is $ 200) and the payment method:
As you can see in the image, the first deposit can be made by credit card, PayPal, or bank transfer.
If you have a choice, we do not recommend bank transfer because it takes longer, and it can be very frustrating to see the price of Spotify rising while you wait for your transfer to be done.
How to make your first trade
When eToro has confirmed the receipt of your credit, you just have to search for “Spotify” in the search bar, click on “Invest” and choose the amount in dollars you want to invest.
*67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.
About this company
Spotify Technology is a Swedish company whose product is the well-known music player application that bears the same name of the company: Spotify. Launched in 2008, the application has become one of the most widely used, accumulating more than 340 million users worldwide.
From the beginning, Spotify was presented as a multiplatform application that was available for Windows, Mac Os, Linux, Symbian, IOS and Android. With this, Spotify was guaranteed a fast diffusion among music lovers as they could have the application always with them, both on computers and cell phones.
Spotify offers its users more than 35 million song titles that they can listen to as on the radio via streaming. And it also offers users the possibility of using the application for free or subscribing to the premium service.
The difference is that the free accounts have some limitations, in addition to having advertising between songs. Unlike the premium ones that do not have any limitations or advertising.
In this way, Spotify generates money with both types of account because with the free account it obtains income from advertising while with the premium accounts it obtains income from subscriptions. Being the subscriptions its main business and major source of income as it has more than 155 million users who pay the subscription.
In its business model, the company keeps 30% of the revenues while the remaining 70% is distributed among the artists. This is based on a formula that distributes the money in relation to the number of plays accumulated by each singer.
It went public only on April 3, 2018, so its history listed on the New York Stock Exchange is quite short. However, this has come to offer a return of more than 200% between highs and lows making it an ideal stock for those who know how to take advantage of volatility.
In general, Spotify is a company with a great future given the segment to which it is dedicated, music. This is a sector that grows and adapts on its own and Spotify is only the medium through which it is disseminated, remaining completely outside of what happens in the music industry. And although so far it does not pay dividends, it is not ruled out that in the future it will do so.
Can you rely on eToro?
eToro has been tested by independent organizations once and again to verify its integrity in displaying previous performance statistics. The results have always confirmed that eToro is very precise with the information.
The main headquarters of eToro is located in Cyprus, and therefore the broker is approved by the CySEC or Cyprus Securities Market Commission, which covers debts up to € 20,000 from its clients, including those from Australia. Furthermore, eToro follows all the strict regulations of the European Union.
In Europe, it is backed by the European Financial Instruments Market or MiFID, and in the USA it responds to the Financial Conduct Authority (FCA). In addition to all these regulations, it should be mentioned that eToro has more than 20 million users all over the world, and it has been operating for fifteen years. In short, we can be certain that our money is in good hands.
Their excellent customer service is also worth mentioning. They have a phone number for assistance, a ticket system, and a live chat.
How to deposit funds on eToro
When it comes to depositing funds on eToro, there isn't really much to say, since it is really straightforward. You just have to click “Deposit funds”, type an amount, and choose the payment option you prefer. You can pay with PayPal, bank transfer, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Skrill, or Neteller.
Evidently, for security policies, you need to be the owner of the account or the credit card.
The lowest amount is $ 200, and there is a maximum authorized for unverified accounts, so if you want to trade with higher amounts, you should verify your account first.
eToro allows transfers in any currency, but charges a fee for making the conversion to USD. That is why we suggest, if possible, depositing in USD from the beginning.
What is leverage?
In case you haven't heard about “leverage”, we'll describe it briefly: it is, simply, the ability to invest a higher amount than you actually have. For example, you can enter with $ 100, but if you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Assuming that, for example, you are certain that Spotify price is going up, and that you have $ 1,000 for “going long”, you must know that you can increase your investment and make more money.
Possibly, you could ask a financial company for a loan, wait for it to be accepted and receiving the money, and then purchase Spotify… But maybe once you have made all that, your prediction could've been confirmed a long time ago, and Spotify would be already so high that it is not worth trading.
Using leverage, you can obtain that amount of money really easily. It's like a loan, but much easier and quicker, and with the advantage that you will be getting it directly from eToro. Before trading, you will how much leverage to use as in the image below:
Within other markets, the leverage you can use is higher. Why? Because cryptocurrencies usually represent medium-long term investments. However, leverage is used mostly for day trading or short-term operations. Let's talk a bit more about how leverage works.
You begin with $ 1,000 and pick leverage x2, then you would have $ 2,000 to invest (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A week later Spotify price goes up by 20% and now your investment costs 2,400. So, a wise decision is to sell them back now.
You will have to pay back the $ 1,000 of leverage and the net profit would be $ 400 (since the other $ 1,000 was your initial investment).
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is pretty decent.
Does it sound too good? The trick is that the risk of losing out is also there. If everything goes as planned, you will make more money in less time; but if the value of the asset decreases, you will also lose more in less time.
Supposing that the asset didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but double, $ 40. That is why to operate with leverage it is fundamental to be familiar with two other concepts: Take Profit and Stop Loss.
Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price.
If you purchased Spotify shares at $ 100, you program eToro to close once it reaches $ 120. That way, you make sure you won't change your mind and decide to keep waiting in case it keeps rising, which could be a mistake.
Also, if you use leverage you absolutely need to place a Stop Loss order (take into account that any small loss is greater with leverage). Always remember to set a Stop Loss lower than that suggested by the platform.
There are several cryptotrading trategies: from buying and waiting to day trading using price fluctuations to your advantage.
My suggestion for those who are beginning to invest is going halfway between the two options: when you open your Spotify position, place a dynamic stop loss 15-20% below the highest price, and let the magic happen.
For instance, if you purchase a cryptocurrency at $ 15, then it rises up to $ 25 and falls again to $17, the stop-loss will close your position at $ 21 or $ 22. Hence, you will get a pretty good income.
It might sound way better to sell when the price is at its highest, right before corrections, but that is simply not possible. The above method is much more realistic and it can give great results.
Sooner or later, you will be prepared for using advanced investment strategies, such as short-selling or using leverage.
* Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Disclaimer: 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.