A scathing last-minute “Heard on the Street” column in the Wall Street Journal didn’t scare speculators away from the initial public offering of Pandora Media. Shares of the Internet streaming “radio” company priced at $16 – well above the projected range of $10-12, which had already been increased a few days ago.
At the $16 price Pandora is valued at a little over $2.5 billion. The company had $137.8 million in revenues for 2010 and posted an operating loss of $321K. Revenues grew strongly in Q1 to $51 million, but the operating loss shot up to $5.2 million. The company said in its IPO prospectus that it expected to continue operating in the red for the rest of this year.
Joining the critics who said the Pandora IPO (at the projected $10-12) was grossly overpriced, the WSJ Heard on the Street column by Rolfe Winkler was headlined “Investors Should Pass on Pandora’s Radio Flier.” He warned of a “lack of operating leverage,” with ever-increasing payments to record labels making it hard for Pandora to sell enough advertising to keep up.
The newly public stock will begin trading Wednesday (6/15) on the New York Stock Exchange. The NYSE wanted the stock listing so badly, despite the tiny float, that it assigned the single letter ticker symbol “P” to Pandora.
RBR-TVBR observation: We were predicting a strong pricing, but this is just mind-blowing. There are no metrics to support the price – just hype. But the hype has been effective. We still look for the price to shoot up from the $16 IPO price when trading begins.