The Innovators
Max Chafkin | Inc. magazine

IPO Craziness, Pandora Edition

 

It's nice when good things happen to good companies. After a more than decade of struggling to turn its streaming music service into a viable business (for a good primer check out Stephanie Clifford's 2007 story), Pandora is profitable and poised for a blockbuster IPO. Today, it announced that it is raising the price of the offering by roughly 50 percent:

Online radio station Pandora increased the share price for its initial public offering today, bringing the company's valuation to nearly $2 billion, according to a recent filing with the Securities and Exchange Commission.

Pandora's shares will now debut on the New York Stock Exchange and sell at a price between $10 and $12, up from the company's original IPO pricing of between $7 and $9. That gave the company a valuation of $1.3 billion. LinkedIn also followed a similar strategy, ramping up its IPO pricing to increase its claimed valuation from $3 billion to $4 billion in less than two weeks.

The comparison to LinkedIn, which had a monster IPO a few weeks ago, is interesting. Although pundits have been quick to brush aside the idea that we are witnessing a Netscape Moment, LinkedIn's success, even slightly tarnished by a drop in its stock price over the past couple of weeks, does seem to be factoring in Pandora's bullish pricing strategy.

It's a fair bet that the founders of other IPO hopefuls—Facebook, Groupon, and Yelp, among others—will be watching closely.

 

 

Senior contributing writer Max Chafkin has profiled companies such as Yelp, Zappos, Twitter, Threadless, and Tesla for the magazine. He lives in Brooklyn, New York. @chafkin