CEO Joe Kennedy told the Herald yesterday that “the company raised the capital it sought to raise” after it drew $234 million in its initial public offering, selling 14.7 million shares at $16 each. The virtual-jukebox company’s shares closed up 9 percent at $17.42 and its valuation shot to $2.8 billion — an amazing figure for a business that’s never made a profit.
“It’s definitely overvalued,” said Anupam Palit, a Green Crest Capital analyst, who pegged the shares at $7.50. “The reason it was hot is there are a lot of people very hungry for tech and social media IPOs, and there’s just not that much supply.”
With Internet companies such as Facebook and Group-on waiting in the wings, analysts said Oakland, Calif.-based Pandora was right to rush out the door.
“Public investors are interested in the business because of the trajectory we’ve had,” Kennedy said. “We’ll continue to grow our listener hours and continue to build on the smartphone explosion.”
Pandora underwent more investor scrutiny than Linked-In’s March IPO, said David Menlow of IPOfinancial.com.
“This offering has fired a very significant warning shot across the bow of the IPO market,” Menlow said. “Investors are starting to pull themselves together.”
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