Pandora Media saw red-hot demand for its stock turn ice-cold on Thursday, with the price plunging in the second day of trading on the New York Stock Exchange. It is now a “busted” IPO, with its stock price closing below the $16.00 pricing of the much-touted offering.
Trading was ugly on Thursday, as the stock fell from the opening bell after the previous day had featured Pandora executives ringing the NYSE opening bell and the stock surging as high as $26.00 before closing Wednesday at $17.42, up from the IPO price. Thursday, however, brought an opening of $16.99 and the stock quickly dipped below the IPO price, recovered and then fell sharply late in the session. It closed at $13.26, down 24% for the day, and near the low point of $12.99.
There had been plenty of warning that the IPO price couldn’t be justified by Pandora’s financial figures. A couple of analysts warned clients away, saying the IPO price should have been more in a range of $4-6. Some observers questioned whether Pandora could ever turn a profit, given its ever-increasing music royalty costs.
Fox Business Network anchor Stuart Varney took Pandora CEO Joe Kennedy to task on the first day of trading, asking him to defend the high valuation. Instead, Kennedy said he was focused on redefining radio, not the stock price.
Good thing, since Kennedy just saw his net worth plunge by a quarter from Wednesday to Thursday. Easy come, easy go.
RBR-TVBR observation: What an embarrassment for the NYSE. The exchange was so hot to trot with this Internet darling that it awarded a rare and coveted single-letter stock ticker, “P,” to a company with a tiny public float and no clear plan to ever turn cash flow positive, much less post a net profit. Is it now headed for penny stock territory?