Pandora IPO: Has the new tech bubble already popped?
The Pandora IPO is off to a lackluster start, easing fears of a second Silicon Valley bubble. But will tech darling Groupon perform like a LinkedIn or a Pandora?
Pandora’s lackluster first day raises questions of whether the rest of the companies planning to go public in the most recent batch of Web 2.0 companies — which also includes group-buying web service Groupon — will continue to appeal to investors.
Shares of Pandora Media rose as much as 63 percent from their initial public offering price of $16 and were trading as high as $26 after the company made its debut on the NYSE. But that slowly tapered off throughout the day, and Pandora ended the day trading at $17.42 at the bell. Shares of Pandora were down around 0.2 percent from its price at the close to $17.38 most recently in extended trading after the bell.
By contrast, LinkedIn’s trading debut went extremely well and the company now has a market cap of around $7 billion, well above the valuation of $4 billion it claimed when it priced the shares of its initial public offering between $42 and $45. Shares of LinkedIn traded as high as $122, giving the company an implied valuation as high as $11 billion shortly after its IPO. But LinkedIn is also profitable, with the company reporting that its first quarter revenue in 2011 was up 110 percent to $93.9 million over the same quarter a year earlier. Net income increased to $2.08 million in the first quarter of 2011, up from $1.81 million in the first quarter last year. By contrast, Pandora has not posted profits in 2010 or 2011.