Did you see what I did there? I thought you would. So a few days ago Pandora Media Inc. went public on the (ticker) with a crazy IPO (Initial Price Offering) of $20.00. Don't get me wrong, I love Pandora and I listen to it all the time. Hell, I'm listening to it right now. I would hate to see it fail but there are a few things I don't like about this whole situation.
First off, the bad. Pandora was able to talk up it's IPO to $20 because of "high demand." Ok the price did started to go up right away, but it quickly fell as well. The price peaked at 9:30, after the market was only open half and hour, and has been declining since then. After it's peak at $24.25 it fell to $17.62 by the close of that day (6/15/11) and currently is at $13.08. But! But! rising to $24 is am 83% gain! Yes, which only lasted for a few minutes and it's now down 65%, so in my totally ignorant opinion, they should have left their IPO at a lower amount like $15. These things combine with their contracts with the record companies expiring in two years will leave them investors a little shy, I think.
Second, Pandora has never turned a profit. Yes they have made money, but none in profit in the history of the company existing. In fact, I think I read they've lost about $19 million since they've started. I'm no business major, but that doesn't sound like a company I want to invest in. There is a lot of comparing Pandora to Sirius radio and even though they do allow you to listen online I don't consider them the same type of company. Sirius also cost more money. Pandora lets you subscribe for $36 a year, which is $3 a month and that's only if you don't want the ad's. If you are willing to put up with an audio ad every few songs, its free. Sirius on the other hand, has their cheapest plan at $12.95 a month. That's $120 more a year than Pandora's "most expensive" plan. It's true that Sirius comes with more options, but if you are like me and only listen on your computer on the internet and don't want to have to pick your own songs and make your own playlists then the choice between these two is really easy. Not to mention Pandora lets you create your own kind of station, where with Sirius you have to choose from one of theirs.
I'm not trying to trash Pandora though. They have almost 90 million subscribers which equals a lot of traffic and that, hopefully equals more money. The higher the traffic, the more Pandora can charge for the ad space/time. If I had a bunch of extra money, I'd probably put a little into Pandora, hope it explodes like Google soon, and then have that little bit of money turn into a big bit of money. The truth is, I don't have a lot of money. I don't have much extra money at all and I think a lot of the eager investors from a few years ago might be feeling like they are in the same boat. So I'll cross my fingers, keep paying my $36 a year and hope that Pandora does well, and if they do I will be happy for them.
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