 Welcome back to the long and the short presented by trade station trade station is a leading fintech company and online broker providing and award-winning trading and investing experience with the support education and tools to help you navigate the market. Well tech IPO activity has increased But should we expect to see a boom here in 2018 some of the most anticipated companies have yet to even announce plans to go public Those are Airbnb Uber or even slack However within less than two weeks of each other Spotify and Dropbox both filed to go public So what does the future hold joining us now is Daniel I've she's strategy officer at GBH insights and Melissa I'm a owner of the Stock switch. It's great to see both of you this morning. Melissa we're gonna go ahead and start with you Spotify last week said that it's opting for a direct listing. We knew that ahead of time But they actually filed the paperwork just last week So do you think this is actually gonna set a new standard for how tech companies are looking to float public shares? But an IPO alternative Well, I think it's gonna it's going to be interesting to see how they fare with it Because if you look at certain companies that did do the IPOs if they weren't priced right then they had those huge spike ups Or they fell immediately and then it took them several years to turn around and rally like snap came out 2017 That still hasn't really turned around that stock. It's still in a downtrend So I think this is kind of gonna be interesting because it's very rare It's very rare that you see a company do it this way In fact, I can't even think of a time that I've ever even traded one like this So I think it's going to be experimental. We'll see how it turns out. It could turn out being good for them But the problem is you when you have an IPO They're in it and usually you have people that's sticking it out with this kind of thing if they can sell it They can buy it. They can dump it There's no there's no what's the motivation? I guess to hold it for a long term It could have a huge spike up drop off and then may take even longer to recover Then then because of Twitter Twitter hasn't recovered at all actually since it first came out that had the big spike fell Twitter's still in a downtrend Facebook turned around and a very short period of time considering what happened to them with the IPO But I think this is going to be an interesting experiment. I'm not sure how it's going to work out It's rare that it happens and it might have a spike drop and then take even longer to recover Yeah, a lot of people I think focused on that volatility that could come of course the company even saying and it's filing that it Could be a very volatile situation and I do believe that every shareholder or investor is able to sell It's set for 10 cents so something that in terms of the trading aspect that a lot of people will be looking at Daniel We want to bring you in here as well Of course the past profitability and the actual profitability of these companies so important and increasingly important We should say here with these IPOs a Spotify not yet Profitable, what is its path to profitability that you see it? How close is it? Yeah, I mean with the nature of that model, it's definitely an uphill battle when it comes to profitability me look five Five billion year in terms of revenue. I think the big thing here is about paid user growth I mean 70 million from 48 a year ago I do think there's a path to profitability But look they're in a battle versus Apple Pandora a bunch of others So I do think this is near-term an investment model Which speaks to why I think it is a volatile situation in terms of how it's going to trade And I think a lot of unicorns are watching this to ultimately see how it plays out But I do think from a growth perspective They definitely gotten through you know some significant hurdles But I mean you've seen it with a billion-dollar loss This continues to be an uphill battle in terms of the profitability profile of just this business model Right well Melissa let's bring you in here What does Spotify have to do to avoid becoming another Pandora Pandora has yet to turn a profit and it's actually an annual profit I should say and it's been public for years Pandora, I love Pandora, but you know what I don't pay for Pandora. I get it for free I just listen to the commercials. That's the problem that Spotify needs a niche in order to make money besides the Subscriptions and also they have to get you don't want to pay for the subscriptions And I think the problem with Spotify is you have the Apple you have the Apple streaming now as well And you pay for Apple, but everybody's got an Apple phone and now Spotify and I think it was last year now They have to pay 30% of the subscriptions through the iPhone They've got to pay to Apple that was a little bit of a monopoly there But they ended up having to pay it and raise the prices So Spotify has to set themselves apart as some kind of unique thing that young people Millennials such as the go-to for music I don't I don't know how to do that I mean but Spotify's got to find a way to do it and to get off of people wanting to go to Apple because if you're looking to compete with Apple, I mean you're competing with one of the most successful companies in the world and You know like you said the Spotify is showing a loss and they're gonna come out with this direct listing I don't know how it's gonna go But the one thing I will say that's really exciting as a person watching in in this age That there's so many IPOs. I mean you just named before we started talking over all these other ones that have yet to Do anything like they keep coming and coming and coming and coming it makes it really exciting to watch these companies See who thrives see who succeeds see who fails, you know, it's exciting Pandora hasn't done well I love Pandora, but it's at four dollars a share a lot in the pipeline Of course We've got to wait to see whether or not it comes to fruition and whether or not some of these private companies where it is easy To raise money in the private markets actually do want to come public Daniel Let's bring you in as well here of course Dropbox another highly anticipated at tech IPO Certainly a unicorn. We know that the company has 11 million paying users 500 million registered users do use its cloud service for free How do you think Dropbox could successfully convert those customers those 500 million into paying full-time customers? Yeah, I mean look that's the challenge for them a competitive space when you look at the cloud market little Dropbox done a commendable job over the last few years But you know you're seeing pricing continue to fall there and I think for them It's going to be the monetization capabilities in terms of that conversion Now I think investors will have a bit of confidence here as they've shown it It's really about a conversion monetization model I think they put a pretty good iron fence around their core customer base You know if you go back a few years ago, I think a lot We're sort of worried that this model couldn't really succeed But now it's really about monetization growth and that kind of profitability profile Ramping into 2018 2019. Well, I want to get both your takes on this Daniel. Let's stick with you for first Pandora dropbox rather actually filed at a time where its biggest competitor box was at an all-time high But then box just reported worse than expected earnings and at one point last week dropped over 13 percent How does this fair for Dropbox? Yeah, I think that's more of a speed bump for box So I don't think investors are gonna look too much into that I think anything it's a positive for for for Dropbox and But ultimately look if you look at box and over the last few years and they've also you got to give them you know Definitely been a feather in the cap for those guys in terms of what they've been able to perform I think net net, you know, there's more of a long-term story for Dropbox next three years I think investors are going to see far as through the trees and I think ultimately it's a more positive environment for Dropbox as There's more of that sort of appetite for an enterprise playing this space Melissa, we only have a short bit of time here But of course Dropbox expected to IPO Spotify expected to IPO do you think one how one offering goes will affect the other I Don't think either one's gonna have anything to do with the other one I would say if you'd be more interested which one to watch I'd say Spotify looks more interesting just the way they're opening it just because I think it has more Potential than Dropbox Dropbox has to compete with box and other software storage units And I think again it goes to you've got to get revenue coming in for the company to have profits Which is what subscriptions for both those services or? Advertising dollars and the big money really does come from the advertising dollars too And you've got to pull in that advertising revenue and what's the why would you want to advertise on Dropbox? So these are the things again the companies have to innovate and find ways to get revenue coming in the door Or I'd see a Dropbox could look like box. I'm looking at the box chart right now that came out in 2015 It had a huge terrible gap down just a couple days ago. That's stock does not look good It's under the original open of the IPO bright price now three years into it to 18 something opened at 20 back in 2015 It doesn't look good. Yeah, I mean, you know This is one that did make new highs but then a drop gap down and to be the chart looks lower And that's not what you want to see and so you know, I don't like this chart right now We are gonna have to leave it there Melissa and Daniel Thank you so much to both of you for joining us That's Daniel eyes chief strategy officer at GBH insights and Melissa Armo owner of the stocks, which always great to see both of you Thanks so much