Pandora prices IPO at $16 a share, double its initial projection

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Will the stock market be giving Pandora Media Inc. a thumbs up?

The Oakland-based Internet radio pioneer, which asks users to give a thumbs up or down on its song recommendations, on Tuesday priced its initial public stock offering at $16 a share. That’s double the $7 to $9 range the company had initially projected in April in a filing with the Securities and Exchange Commission.

It’s also higher than the range Pandora gave just days ago when it raised its target to between $10 and $12. The stock will begin trading on the New York Stock Exchange on Wednesday.

Tom Petruno, The Times’ markets columnist, said in a post on Money & Co. that Pandora is simply tuning in to a chorus of investors clamoring to get a piece of hot Internet IPOs.

With companies such as Demand Media Inc., LinkedIn Corp., Yandex and now Pandora paving the way, many investors are frothing over what could be the main events over the next year when Zynga Inc., Groupon Inc., Facebook Inc. and Twitter Inc. are expected to go public.

But the lofty stock valuations are causing some analysts to see the scenario as a subdued remix of the dot-com bubble in the late 1990s, when companies with little revenue and even smaller chances of making a profit went public.

This time around, however, many of the companies have years of operations under their belts and show strong revenue growth. Some, including Zynga, are even said to be profitable.

Pandora, however, whose IPO pricing gives the company a $2.4-billion valuation, is still in the red. As is Groupon, which lost $389.6 million in 2010.

That hasn’t deterred investors from piling in and driving up IPO prices. For Pandora, the question now is how high investors will push the stock in its trading debut.

‘It’s a great company that’s probably worth $1.2 billion,’ not $2.4 billion, said Anupam Palit, an analyst with GreenCrest Capital Management in New York. ‘There’s so much investor demand now for hot tech IPOs that the price has gotten a little rich for my taste.’

-- Alex Pham