Pandora IPO Prices at $16 a Share, Begins Trade Wednesday

Online radio station Pandora P has priced shares at $16 in its initial public offering, a source familiar with the deal told Reuters. The company raised $235 million by selling 14.7 million shares, easily beating the company's initial target range of $10 to $12. The company is valued around $2.5 billion, and the stock should see high interest this week. Shares begin trading on Wednesday. Technology companies have investors swooning again this year, with LinkedIn, Groupon, and Zynga gaining interest by the day. Pandora was quick to catch an opportunity to raise capital, especially because it has yet to tun a profit. According to a statement, "Pandora has granted the underwriters a 30-day option to purchase up to approximately an additional 2.2 million shares to cover over-allotments, if any. Pandora will not receive any proceeds from the sale of shares by the selling stockholders." Investors are sure to be attracted to the millions of users that listen to Pandora every month. Certainly, the website's ease of use and free access has built a loyal fan base. Users can use the free and paid services on their computer, smartphone, or car. A Reuters report notes that "With 90 million registered users in the United States, Pandora makes money mainly from advertising and it has to pay significant royalties for music. For the three months ending April 30, 2011 Pandora reported revenue of $51 million with a net loss of $6.8 million." The Pandora website describes its purpose: "The Music Genome Project®, a deeply detailed hand-built musical taxonomy, powers the personalization of Pandora® internet radio by using musicological "DNA" and constant listener feedback to craft personalized stations from a growing collection of hundreds of thousands of recordings."