Pandora Media Inc sold its initial public offering (IPO) of stock at US$16 per share late on Tuesday, fetching twice as much as the popular but unprofitable Internet radio service expected less than two weeks ago.
The IPO’s completion means Pandora was to make its stock market debut yesterday morning with a market value of US$2.6 billion. That is a lofty number for a company that has lost US$92 million since it started as a music recommendation site called TheSavageBeast.com 11 years ago.
Since then, it has morphed into a service that streams music over high-speed Internet connections to computers and a widening array of other devices.
The tunes are tailored to suit the individual tastes of Pandora’s 94 million registered users.
The large audience and the amount of time that people spend listening to Pandora is the main reason money managers and institutional investors drove up the value of the company’s IPO.
The next measure of Pandora’s investment appeal was to come yesterday when the general public was set to get its first chance to buy a stake in the company. The shares were to trade under the “P” ticker symbol on the New York Stock Exchange.
The buyers of the IPO appear to be betting the recent fervor for the stock of rapidly growing Internet services will quickly drive up Pandora’s trading price. That’s what happened last month after the IPO of LinkedIn Corp, the company behind the world’s largest site for business -networking. LinkedIn’s stock more than doubled on its first day of trading to mint it with a US$9 billion market value.
From perspective of Pandora and the insiders who sold some of their stock, this IPO already looks like a smash hit. Before expenses, the offering raised about US$96 million for the company, which is based in Oakland, California. Existing stockholders collected a combined US$139 million by selling a total of 8.7 million shares.
The IPO price represents a more than five-fold increase from what Pandora’s own board thought the company was worth just six months ago.
Pandora’s board appraised the stock’s value at US$3.14 per share in December, according to documents filed with the Securities and Exchange Commission.
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