Pandora Opens At $20 Per Share With A Market Cap Of $3.2 Billion
Yesterday, music streaming service Pandora priced its IPO at $16 per share (valuing the company at $2.6 billion). The company originally set the range of its IPO at $7 to $9 per share, at a market cap of $1.3 billion …
Context & Ripple Effects
Pandora's first day caps a fast arc: the company filed to go public in February 2011 with 80 million registered users, then priced its IPO on June 14 at $16 a share — nearly double the top of its original $7–$9 range — for a $2.56 billion valuation ($16 pricing). Opening at $20 adds another 25% on top, lifting the market cap to $3.2 billion.
The gap between the original filing range and the open says demand ran far ahead of what underwriters penciled in months earlier, making this one of the stronger consumer-internet debuts since the post-2008 window reopened.
First-order effects
- Pre-IPO shareholders and employees hold stakes marked up roughly 150% over the original range midpoint — paper gains booked before Pandora has ever reported a quarter as a public company.
Second-order effects
- A clean debut at a premium to pricing gives other venture-backed consumer web companies a live reference point for their own filings, tightening the queue behind Pandora.
Third-order effects
- As a listed company, Pandora's royalty-heavy cost structure gets scrutinized quarterly against its ad revenue, putting the economics of ad-supported streaming itself on public display rather than inside private company decks.
The trend: Ad-supported streaming services are graduating from venture funding to public markets in 2011's reopened IPO window, with investor demand repricing them well above initial ranges.