SAN FRANCISCO — Pandora Media Inc. sold its initial public offering of stock at $16 per share late Tuesday, fetching twice as much as the popular but unprofitable Internet radio service expected less than two weeks ago.
The IPO’s completion means Pandora will make its stock market debut Wednesday morning with a market value of $2.6 billion. That’s a lofty number for a company that has lost $92 million since it started as a music recommendation site called TheSavageBeast.com 11 years ago.
Since then, it has morphed into a service that streams music over high-speed Internet connections to computers and a widening array of other devices. The tunes are tailored to suit the individual tastes of Pandora’s 94 million registered users.
The large audience and the amount of time that people spend listening to Pandora is the main reason money managers and institutional investors drove up the value of the company’s IPO.
The next measure of Pandora’s investment appeal comes Wednesday when the general public gets its first chance to buy a stake in the company. The shares will trade under the “P” ticker symbol on the New York Stock Exchange.
The buyers of the IPO appear to be betting the recent fervor for the stock of rapidly growing Internet services will quickly drive up Pandora’s trading price. That’s what happened last month after the IPO of LinkedIn Corp. the company behind the world’s largest site for business networking. LinkedIn’s stock more than doubled on its first day of trading to mint it with a $9 billion market value.
Pandora shares are entering a stock market that has become much shakier amid signs that the economy’s recovery from the Great Recession is faltering. The tech-driven Nasdaq composite index has fallen 5 percent since LinkedIn priced its IPO May 18.
Anyone thinking about buying Pandora’s shares Wednesday also may want to consider this: LinkedIn shares closed Tuesday at $76.34, a 19 percent drop from where they finished on the first day of trading.
From perspective of Pandora and the insiders who sold some of their stock, this IPO already looks like a smash hit. Before expenses, the offering raised about $96 million for the company, which is based in Oakland. Existing stockholders collected a combined $139 million by selling a total of 8.7 million shares.
The IPO price represents a more than five-fold increase from what Pandora’s own board thought the company was worth just six months ago.
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