Pandora shares jump in IPO debut
The stock was priced at $16 and has soared as high as $26. What are investors seeing here?
Online music service Pandora Media (P) saw a nice jump in its initial public offering Wednesday. The company raised about $235 million, pricing shares at $16 each.
The stock opened at $20 surged to $26, but ended up closing the day at $17.42. At the $20 opening, the company was valued at more than $3 billion. Fairly outrageous, since Pandora has never made a profit, gets revenue mostly from advertising and faces enormous competition.
Check out this video discussion about Pandora's pros and cons and why the company can't achieve economies of scale.
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Still, the investor response was fairly predictable, given what we've seen with tech IPOs this year. LinkedIn (LNKD), Yandex (YNDX) and other companies saw enormous jumps in first-day trading. And those with small offerings -- Pandora sold only 9.2% of its total shares -- can see even more demand.
- Related: Why Pandora will rock Wall Street
But Rolfe Winkler argues in The Wall Street Journal that investors shouldn't chase Pandora. The company is paying more royalties to stream music, and it depends on advertising for 90% of its sales. Only about 1% of Pandora's listener hours are for advertising, compared with 20% for traditional radio, he adds.
And though Pandora is landing some key partnerships -- Ford (F) will add the service to some of its vehicles -- "meaningful profits could be years off," Winkler adds.
"bubble-bubble, toil and trouble"
Amen. I have given up hope that Wall Street will ever learn anything.
Don’t despair all you Pandora investors who just bought at $26. There’s always going to be another IPO waiting for you around the corner. I’m going to be creating a new dot com trading website around my used car dealership next week. Goldman tells me they can take us public with a $2 billion cap if I let them manage the offering and take a $billion in trading profits for themselves in the process.
"What are "investors" seeing here?" LMAO.
The primaries offload this crap to the chumps.....AGAIN!
Old adage from the Blue Ridge Mountains....................
"The 2nd time you're kicked by a mule..you don't learn anything."
This article has faulty information and must have been written by someone who doesn't use Pandora. Pandora has higher one which is its regular radio with more features. Some of the features are higher quality audio and others. This costs thirty six dollars yearly. Please do your research. Please tell me if I'm wrong. Thank you
That POS edumacation you got really worked out well. The IPO lost money on the day!!! It's a bubble like Groupon, LinkedIn, etc. They are all pump and dumps, even Ray Charles or Stevie Wonder could see that! I laugh when people say silver and gold are bubbles but these POS IPO's are not. Good thing I'm not a sheep like the rest of the USA. Prepare to get fleeced folks!
@swilli1020: FB makes money buy selling a ton of ads, and with over 600 million members you can bet somebody is buying.
These numbers are nothing compared the to the value of the demographic information that is FREELY given by it's members that can be, and you can bet is, sold by FB to marketing and advertising companies.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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