* Pandora prices at $16 vs. revised $10 to $12 range
* On planned 14.7 million share sale, raises $235 mln
* IPO values Pandora at about $2.5 billion
(Adds analysts comments, background, byline)
By Jennifer Saba
NEW YORK, June 14 Online radio company Pandora
Media (P.N) priced shares in its initial public offering above an
already raised range on Tuesday, the latest company to take
advantage of red-hot valuations for Internet companies.
The company priced its shares at $16 each, according to a
source familiar with the deal. The company raised $235 million
based on 14.7 million shares it planned to sell, according to a
Late last week, Pandora increased its price target range to
$10 to $12 per share.
The company's shares are expected to begin trading on the New
York Stock Exchange on Wednesday under the symbol "P."
Internet companies such as Pandora, professional networking
company LinkedIn LNKD.N and online daily deal site Groupon,
which filed to go public earlier this month, remain a healthy part
of the U.S. new issue market, despite a broader downturn and
postponements of other large IPOs like Ally Financial.
While the Oakland, California-based Pandora has yet to turn a
profit, it is valued at about $2.5 billion.
LinkedIn and other Internet companies such as China's Renren
(RENN.N) and Russia's Yandex (YNDX.O) have had strong IPOs
building on anticipation for potential offerings by Facebook and
"All these guys are trading on potential, not on existing
earnings," said Wedbush analyst Michael Pachter. "I think
Pandora's model is going to evolve."
Pandora runs a service that personalizes the listening
experience by recommending songs based on member feedback,
allowing members to create their own playlists based on a song,
artist or genre.
Users can listen to the service through computers, smartphones
and devices that hook into home entertainment centers such as the
Roku box. Pandora has also struck up partnerships with auto
manufactures including Ford (F.N), General Motors (GM.N) and
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.
"We don't believe Pandora has constructed a moat in the face
of powerful music labels and an unproven revenue model,
particularly versus the competition," according to a research note
Pandora is going up against satellite radio provider Sirius XM
Radio Inc (SIRI.O), music services such as Rhapsody, not to
mention the spate of music storage lockers that can be accessed
anywhere from the likes of Apple (AAPL.O), Google (GOOG.O) and
Founded in January 2000 as TheSavageBeast.com, the company
changed its name five years later to Pandora Media.
Underwriters on the IPO were lead by Morgan Stanley, JPMorgan
(Reporting by Jennifer Saba; Editing by Bernard Orr, Phil