Internet radio star, Pandora, made its Wall Street debut amid investor enthusiasm for technology stocks. Pandora’s shares soared in early trading on Wall Street on Wednesday before paring gains at the close of trade.
Pandora, which is trading on the New York Stock Exchange under the ticker symbol “P,” was priced at US$16 and surged to US$26 shortly after the opening bell.
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Pandora eventually ended the day at US$17.42, a gain of 8.9 percent.
Pandora, which creates personalised radio stations for users based upon their favourite artists or songs, raised US$235-million with its initial public offering and had a market value of US$2.55-billion at its offer price.
A total of around six million shares were offered by Pandora while some 8.7-million were presented by selling stockholders.
The California-based company, was founded in 2000 but has yet to turn a profit and some financial analysts were skeptical about the outlook for the company because of its need to pay huge sums for music licenses.
The eagerness displayed recently for technology stocks, however, appeared to carry over into the Pandora offering.
Professional social network LinkedIn launched on the New York Stock Exchange a month ago and saw its stock price more than double on the first day and Yandex, Russia’s top internet portal and leading search engine, also had a strong debut.
Earlier this month, Pandora had estimated it would launch its stock at US$7 to US$9 before increasing the figure to US$10-US$12 and eventually to US$16.
Nick Einhorn of Renaissance Capital said interest in Pandora’s IPO stems from it being a well-known brand with more than 90-million users and a “fast-growing company that is a leader in the Internet radio market.”
“The most successful recent IPOs have been unique, fast-growing companies that have a large opportunity such as LinkedIn or Fusion-io and I think that is true of Pandora,” Einhorn said.
“They have room to increase the amount of advertising on their service,” he added. “They currently average one minute of audio ads per hour of listening, compared to 13 minutes for traditional terrestrial radio, which would help them become profitable.”
The bulk of Pandora’s revenue comes from advertising, while about 14 percent of the money it takes in comes from subscriptions.
In an interview with the CNBC business network, Pandora chief executive Joe Kennedy said the company, which lost US$11-million last year, has been improving operational margins and cash flow.
Kennedy declined to say, however, when he expected Pandora to be profitable.
“We’re not putting any timeline on any of the financial milestones,” he said.
Kennedy also said Pandora, which is currently only available in the United States, has global ambitions.
“Our vision is for Pandora to be a global service but we have to go country by country,” he said. “We see global opportunities in the long run.”
Pandora is available on smartphones, tablet computers like Apple’s iPad, Amazon’s Kindle eReader and has been expanding recently into cars.
US automobile manufacturer Ford began integrating Pandora into selected models last year and other auto makers have followed suit. –AFP
