Pandora, announced today that they are raising the target price of their IPO from a range of $7-$9 to $10-$12 per share. It is anticipated that nearly 17 million shares will be sold during the offering. The company hopes to raise over 200 million when they go public any week now.
Boasting 95 million registered users and 35 million active users, the internet radio provider leads the pack that includes companies like Slacker and MOG. As yet, Pandora has not been profitable, but the advent of smartphones and seamless dashboard connectivity in new cars gives the internet radio platform hope.
Earlier this week I wrote an article, “As Pandora Goes Public – Worries for Sirius XM” , speculating that the Pandora IPO would be richer than the $150 million initially anticipated. Even with a price tag in the $10-$12 range, most of the money raised will be used as a cash out for current investors. At a $12 per share price point, current investors stand to cash out to the tune of $150 million, leaving the company with roughly $50 million.
In comparison, Pandora now has more than 90 million registered users, and accounts for more than half of the Internet radio market. Unlike Sirius, Pandora is a free service, supported by advertising, which accounts for 86% of the company's revenue.
Pandora also offers a subscription service, which charges $36 a year for unlimited, commercial-free music streaming and other premium content.
Shares of Sirius XM have been under pressure this week, as the bears question the impact of Pandora's IPO on the company, and lackluster auto data was released.
Still, there are several catalysts that could potentially move the stock, including the launch of Sirius XM 2.0 later in the year and a potential rate hike.
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