 Welcome back to center. I'm Nora sitting next to Brad. It's day two of trading for Spotify shares The stock is falling along with the broader market after ending up almost 13% on its first day of trading on the New York Stock Exchange Joining us now to discuss this is Melissa Armo owner of the stocks whoosh. Melissa happy to have you here So hello, so Spotify's debut made its debut during a turbulent time as we know for stocks So do you think this could be an opportunity for investors to pick up the stock if it continues to get dragged down by the macro factors at large? No, I don't think Spotify is a buy right now unless you want to hold it for a very long time Which maybe you do maybe you do but again, could you get it at a better price then? I think right now it's going to continue to drop it did end up opening around 165 ish But it dropped heavily yesterday and it dropped again today a gap down this morning with the market Even though the market's rallying a little bit here today. This still looks dead to be honest with you When you do these things again, this wasn't a normal Normal come out. It was a direct listing So it's kind of interesting seeing how these things trade right afterwards because this is new But I really think you needs at least six months Maybe 12 till it gets back up and going around again and the stock could drop all the way down to 100 points till then So why would you buy it now when 3968 where it's trading right now today? I think you wait you wait until the stock shows some kind of signs of strength, and I don't know when that is And Melissa, do you think given the new nature of the listing yesterday? Do you think the shares were fairly priced at the open? Do you think 16590 was a fair price? Well, they were first they were saying 160 to 220 and then the NASA came out and said oh 132 I think they said and it ended up opening obviously over that 132 mark and slightly even over 160 But I think people probably had higher expectations of this maybe to get bump up closer to that 200 or even 180 In fact, let me just quickly look I think it did the hit the high yesterday was not quite 170 it was 169 So I think even though it opened a little bit over where people said initially or in the range I think people had a higher expectations for the first day in other words It had a pop but the pop was a small pop It should have had a bigger pop like it would have been in better But what I had a big spike up to 180 you're close to 200 Then I would have felt a little bit better about it at least for the short term because right now today I mean this this is this broke 140 today Factors do you look for before you're convinced on Spotify? Do you look for profitability? Do you look for clear evidence that they can outlast an Amazon and Apple in the music streaming space? Do you look for evidence that they are the Netflix of music streaming? What do you look for? Well, I will say one thing. They do have 71 million paid subscribers. That's great for they're not making any money yet So that that's one thing. I really don't look at fundamental So I really do look like technicals and technically I'll tell you exactly what I would look for for this The stock has to gap up and has to gap up so second day of training to stop gaps down That isn't a good sign. That's what I'm saying. You wait the stock gaps up And it has to be a strong gap a strong gap We see a lot of buying and it's unfortunate because the time we have this was ill time with the market Of course, they had planned to rule this out anyways, but the point is that the market right now I still think is lower even though we're trading up today I still think the market has another drop in it And so it's not a great time to be coming out with something right now Especially the market has another drop if the market was it so strong like last year in 2017 We were rallying and making new highs every day It probably would have had a little bit better performance because people right now are kind of scared to buy into something And I want to see a strong gap up in Spotify Before you get long this stock and it it may not be for a while because again if the market continues lower It's going to drag everything down again I know the market's running today, but we did gap down today and we were even down worse this morning way earlier this morning in the in the pre-market than we were So how how much further and how much lower do you think Spotify share price could go? What is that? What is the level that investors should be looking for? I'm telling you the stock could go to 100, but I wouldn't buy it there If you want to wait to buy this and tell you exactly where you buy it You buy it over the open word open yesterday You could buy it right then if this stock gaps up tomorrow morning over the exact number is this 165 91 You could buy it buy it it'll take off like a rocket, but that is 25 Your points. It's 20s. It's look how look at it. It's 25 points underneath that right now today So the chances of it doing that are probably not that great It would have to have a tremendous amount of buying and it probably would need the market too You can buy this stock when it goes over the high of the open of the day that it came out That would be a great buy So but what is the biggest catalyst? What would you say is the biggest catalyst for the stock? I mean there are a lot of different factors that go into this particular company given the competitive factors that They cited in their s1 given the markets and the broader tech sector and how they're going to be impacted as A result of being in that conversation as well What what is the biggest catalyst that we can pay attention to to kind of gauge where we might see this gap up? Because well first of all, I don't know when their first earnings are going to report That's something you can look at you want to watch it on the earnings So watch that date something could happen that day to could gap up on that date That would be the first watch whatever that date is and secondly since since since it's came out And secondly also they have a big competitor in apple and again I know Spotify is different, but they're still competing with apple and apple is a strong competitor to have no matter what you do And again because that broader sector right now is trading down those tech stocks don't look that great or again being up This is going to go along right down with all of those even though it just came out yesterday And even though it looks promising in the longer term remember twitter did something very similar But twitter never ended up really recovering facebook did something similar when it first came out It's traded down. It in fact facebook did exactly this facebook when it first came out in 2013 or 14 I forget now 2014 it was a thing or no it wasn't 2013 when it was when it was when did facebook come out? Facebook did the exact same thing Yes, it got part of the day gap down in exit traded down almost a year almost a year till it was a buy again And this could do the exact same thing. So that's why you can't buy now 139 after wait It could even drop under 100. I mean i'm just throwing these numbers out there You don't have any technicals to look at it. It just opened yesterday, but i'm telling you the stock dropped 25 points in one day That isn't bullish You know what i'm saying Yeah, totally understand and hear you uh the big question I have is when you got two companies that control devices because they're manufacturing them They're selling them and they also have a say in how much visibility spotify could have could Have on some of those devices Especially as you think about amazon in the echo devices realm and you think about apple also moving more into home The big the big question here is with them controlling devices How much do you think and do you think spotify could outlast them? Spotify has a sharp making money though That's the only way they're going to outlast them or they're going to get the stock to get moving again That means getting more new subscribers and also with the advertising. That's a big reason And of course, this is very controversial right now with the facebook But that's one of the reasons that facebook's done well on an apple too and even youtube Well, you've got to find a way to get the advertisers you get the advertising dollars in there any ramp up the subscriptions That would make this look better and that would probably pump up the stock And that would be something that you'd want to look at when you watch the stock and earnings Amazing so insightful melissa. Thank you so much. That was melissa armo owner of stock All right, guys, it's time to say goodbye, but don't go anywhere between bells Starting in just a minute and don't forget to check out closing bell at 3 p.m Eastern time nor and I will be back here to give you all the delightful news around the closing bell Don't go anywhere between bells coming up next. See you later