an internet radio company that has been around for more than ten years. The
company has not been publicly traded until recently when Pandora had its IPO. Early
on shares in the company soared as high as 48% from the IPO price.
The problem was that the stock then turned around in late trading and prices
tumbled, yet it still ended up above its opening price. That means that
people who bought early are still doing well enough on the stock, but those
that bought later in the day are facing a loss in a single days trading. The
reason for the about face on the stock has to do with concerns of whether or
not Pandora will even be profitable.
The problem is that Pandora is growing its user base very quickly and the ads
sold to support the network aren’t growing nearly as fast. This raises concerns
of whether or not Pandora will be able to turn a profit in the future.
Pandora listeners are also migrating more and more from listening via their
computer to listening on a mobile device and mobile ads are worth even less
than ads on computers. Pandora CEO Joseph Kennedy said, "We are
tremendously focused on providing a great listener experience and that's what
has gotten us to this point."
The stock's IPO price was $16 per share and it closed the day at $17.42 per
share. Some analysts are calling for investors to avoid Pandora stock for now.
Analyst Rick Summer from Morningstar has a target price on the stock at $6 per
share. The WSJ reports that Pandora CFO Steve Cakebread thinks
that its margins
will improve as listener hours slow down.
Cakebread said, "[We should] improve operating margins as our listener
hours slow down." The WSJ also lists the value of Pandora at $3.1 billion
fully diluted and notes that a limited float of 95 is driving shares up higher
than the first day of trading.
quote: Google has proven that you don't need to charge for a consumer product to turn a profit.
quote: Google, if you'll notice, has been extremely creative. They haven't just sit around with their search engine placing ads. Their Android phones have been selling in droves.
quote: Google, if you'll notice, has been extremely creative. They haven't just sit around with their search engine placing ads.
quote: Once you IPO, you are _expected_ to earn money for your owners (now the public).
quote: This is clearly a long term investment, and anyone getting involved without realizing this is a fool..
quote: When their CEO comes out and says this is not his goal right now, we make him suffer for it.
quote: The desperation of people for instant returns are key to the stock market and financial institutions f**k ups over the past 15 years coming to a head in 2008.