Pandora soars on Wall Street debut

Shares in Pandora soared on Wednesday as the Internet radio star made its debut on Wall Street amid investor enthusiasm for technology stocks. Pandora, which is trading on the New York Stock Exchange under the symbol "P," was priced at $16 and briefly surged to $26. It was trading at $20.05 at mid-day. Pandora, which creates personalized radio stations for users based upon their favorite artists or songs, raised $235 million with its initial public offering and had a market value of $2.55 billion at its offer price. A total of around six million shares were offered by Pandora while some 8.7 million were presented by selling stockholders. Pandora, which is based in Oakland, California, was founded in 2000 but it has yet to turn a profit and some financial analysts were skeptical about the outlook for the company and its need to pay huge sums for music licenses. The eagerness displayed recently for technology stocks, however, appeared to carry over into the Pandora offering, sending its share price up over 25 percent. Business-oriented social network LinkedIn launched on the New York Stock Exchange a month ago and saw its stock price more than double on the first day. Earlier this month, Pandora had estimated it would launch its stock at $7 to $9 before increasing the figure to $10-$12 and eventually to $16. Nick Einhorn of Renaissance Capital said interest in Pandora's IPO stems from it being a well-known brand with more than 90 million users and a "fast-growing company that is a leader in the Internet radio market." "The most successful recent IPOs have been unique, fast-growing companies that have a large opportunity such as LinkedIn or Fusion-io and I think that is true of Pandora," Einhorn said. "They have room to increase the amount of advertising on their service," he added. "They currently average one minute of audio ads per hour of listening, compared to 13 minutes for traditional terrestrial radio, which would help them become profitable." The bulk of Pandora's revenue comes from advertising, while about 14 percent of the money it takes in comes from subscriptions. In an interview with the CNBC business network, Pandora chief executive Joe Kennedy said the company, which lost $11 million last year, has been improving operational margins and cash flow. Kennedy declined to say, however, when he expected Pandora to be profitable. "We're not putting any timeline on any of the financial milestones," he said. Kennedy also said Pandora, which is currently only available in the United States, has global ambitions. "Our vision is for Pandora to be a global service but we have to go country by country," he said. "We see global opportunities in the long run." Pandora is available on smartphones, tablet computers like Apple's iPad, Amazon's Kindle e-reader and has been expanding into cars. US automobile manufacturer Ford began integrating Pandora into selected models last year and other auto makers have followed suit.