Pandora prices IPO at $16, well above expectations
That was well above the expected range of $10 to $12, which the company and its underwriters last week raised from the initial estimate of $7 to $9 a share.
Oakland-based Pandora and its shareholders sold a total of 14.7 million shares, raising $235 million in all. The deal values the company at more than $2.4 billion.
Pandora, which lost $1.8 million last year on revenue of $138 million (see the prospectus for the stock deal), is riding the new wave of investor interest in Net-based businesses, particularly those focused on social networking.
Pandora allows users to create personalized radio stations. The company's revenue is primarily generated from advertising.
Professional-networking firm LinkedIn Corp. set the stage for a rush of Net-related IPOs when the company went public at $45 a share May 18 amid intense demand from large and small investors alike. LinkedIn shares rocketed as high as $122.70 on their first day of trading May 19 and closed that day at $94.25, up 109% from the IPO price.
Less than a week later, Net search-engine firm Yandex -- dubbed Russia’s Google -- went public at $25 and soared to close at $38.84 on its first trading day, for a gain of 55%.
The stocks’ performances brought back memories of the late-1990s tech-stock bubble, when investors bid share prices of start-up dot-com firms to the sky -- until the bubble burst in the spring of 2000. Still, today's crop of Net companies is far more seasoned, and the online universe overall is far larger than it was a decade ago. Both factors are luring growth-hungry investors.
The sharp boost in Pandora’s IPO price suggests the stock will surge Wednesday as investors who couldn’t buy the IPO get their first crack at the shares. The stock will trade under the symbol P on the New York Stock Exchange.
But investors should note: Both LinkedIn and Yandex have fallen sharply since their first trading days, as the euphoria has ebbed. LinkedIn closed at $76.34 on Tuesday; Yandex closed at $31.60.
-- Tom Petruno
Photo: The Pandora website is displayed on a computer monitor in San Francisco. Credit: Bloomberg News