Pandora Media increases its IPO size


Demand for the soon-to-be public stock of Pandora Media is apparently so strong that the company has boosted the size of the IPO and the expected pricing range. The issue is expected to price on Tuesday (6/14) and begin trading on the NYSE as “P” on Wednesday.

The latest prospectus update filed with the SEC has increased the maximum size of the proposed offering to $202.6 million – more than double the original plan for a $100 million IPO. More recently it had been projected to raise $109-140 million. But that was at a projected price range of $7-9 per share. The new projected pricing range is $10-12.

Also, Pandora itself is now offering slightly over six million new shares, rather than five million. Along with the 8.7 million being sold by existing investors, the base size of the IPO is now 14.7 million shares. That could grow to 16.7 million if the underwriters pick up the entire greenshoe of two million shares to cover overallotments.

At the high end of the new range, the total enterprise value of Pandora would be around $1.9 billion. The Internet streaming radio company’s fiscal Q1 net loss increased 125% to $6.8 million and the company expects to continue to post net losses for the remainder of this year. But Wall Street is focused on its revenue growth. That was a 137% improvement to $51 million for the quarter.

RBR-TVBR observation: A new Internet IPO trend is to offer only a small portion of the total equity to maximize demand and price. In this case, the six million new shares being offered by Pandora will only amount to 4% of the total equity. The new shareholders will be paying $10-12 per share, while the prospectus calculates that the existing shareholders will have gotten in at an average of 89 cents per share.