Pandora, the US music service which is among the various American digital firms currently floating themselves for the first time, has sold 14.7 million shares at $16 a piece, considerably more than the upper price of the original proposed price range. Those Wall Street kids really wanted their slice of this loss-making streaming music platform.
The shares sold constitute about 9% of the company, which means the overall market cap valuation for Pandora is $2.56 billion. Some of the money raised will go straight to the firm’s existing shareholders, while another chunk will be used by the company for “general corporate purposes”
Although probably one of if not the most successful of the online streaming music services currently in existence, Pandora, which had revenues of $167 million in the last year, and which makes its money through subscriptions and ad sales, is yet to really make a profit.
Given the high royalties it has to pay out to the music companies, many reckon $2.56 billion is far too high a valuation for the firm, and therefore some City experts reckon those who bought shares at $16 yesterday – driven by the hype surrounding the latest dot com bubble – have seriously overpaid.