Pandora Media surges on IPO day
Internet radio company Pandora Media (NYSE:P) saw its shares jump around 45% in its New York Stock Exchange debut on Wednesday, giving the company a market cap of more than $3.7 billion.
The Oakland, California-based company, which provides internet radio streaming services, priced its initial public offering of roughly 14.7 million shares at a price of $16.00 per share - above the initial $10 to $12 range, which was already increased from the $7 to $9 range on account of strong investor appetite.
A total of 6.0 million shares were sold by the company, and a total of 8.7 million were offered by selling shareholders.
Pandora said it also granted underwriters a 30-day over-allotment option to purchase up to an additional 2.2 million shares. The bookrunners for the offering were Morgan Stanley and J.P. Morgan Securities.
The company, which provides its services in both a subscription-based and advertising model, uses technology that matches up certain types of music with listeners' tastes. Pandora's services are free on the internet, as it generates revenue from advertisers.
However, Pandora is not yet profitable, unlike other recent tech IPOs that generated buzz, including social media professional network LinkedIn, resulting in analysts giving an outlook that is nowhere near as bullish.
According to reports, some analysts have said that the stock price is inflated considering the company is not profitable yet, and that there are certain risks in its business model as a result of increasing music licensing costs, the largest expense on Pandora's income statement.
Still, for the three months ending April 30, Pandora reported that revenue more than doubled to $51 million from the same period a year ago, as user numbers keep on rising, with the latest figure at 90 million registerd users. It also, however, lost $9.1 million during the latest quarter.
Shares of the company were recently trading at $19.30 as of just after noon - up 20.6%, already climbing down from the day's earlier highs.
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