Wednesday, June 15, 2011

Pandora Goes Public, Provoking Joy and Consternation

By Rachel Swan
Wed, Jun 15, 2011 at 2:46 PM

Despite reservations from SF Weekly columnist (and prominent tech reporter) Dan Mitchell, Pandora appears to be doing well since going public today. Like, really well. It's generated $235 million to investors, thus far, and the company is now valued at $3 billion. The New York Times reports that shares opened at $20 and rose as high as $26 over the course of the day. Still, the Weekly's music editor Ian S. Port has his doubts. He and Mitchell both pointed out that the cost of music royalties will probably always exceed the company's ad revenue, and that Pandora is always doomed to be a profit-losing operation. But try telling that to its underwriters — Citigroup, Morgan Stanley, and JPMorganChase. Or any other investors enjoying the contact high of fast-growing Internet companies, many of which are defying expectations on the stock market. No one's forgotten the dot com bubble, but for now, shareholders are remarkably sanguine.

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