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Pandora Media (P) |
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WIKI ANALYSIS
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This company completed an initial public offering (IPO) of its stock in 2010. View articles that reference this company. Recent IPOs: Globe Specialty Metals • LogMeIn • Invesco Mortgage Capital • Medidata • Chemspec |
Pandora Media (NYSE:P) is an internet radio company. The website creates a playlists for individuals based on songs they select. It then adapts the playlist over time based on real time feedback from the user. This is based on Pandora's "Music Genome Project" which is a custom algorithm that predicts a user's musical preferences based on previous selected or "liked" songs. Pandora makes money primarily through advertising. Users are given display, video, and audio advertisements. In addition, some users may upgrade to a premium paid version without ads.[1]
Business Overview
For the full year 2010, Pandora reported a total revenue of $138M and a net loss of $1.8M. This was 151% increase in revenue from the previous year.[2]
New Updates
The company's initial public offering of stock on the NYSE occurred on June 14, 2011. The company offered 14.7M shares each for $16. This was well above the initial price range of $10-$12. The offering raised a total of $235M. The final offering was 45% larger than the midpoint of the initial price range. The lead managers of the IPO were Morgan Stanley, J P Morgan Chase (JPM), and Citigroup (C).[3]
Trends & Forces
High, unavoidable cost of content acquisition
Pandora's largest expense, roughly 50%, has historically been content acquisition. These costs consist of licenses from and royalties to the original copyright holders. Many of these fees have been negotiated on long term contracts with the largest record agencies. Furthermore, this expense is largely unavoidable. Pandora incurs these costs each time a user hears a new song. An increase in the cost of acquiring the content could make the business model not possible.[4][5]
Users move towards mobile
Users have increasingly shifted towards the mobile application of Pandora. Rather than visiting the website, users have listened to the music through its application. This means that display and video ads are far less likely to be seen. As a result, the company must rely on audio ads. This makes application advertisement less valuable compared to the standard website. As a whole, mobile advertisement has remained smaller than web advertisement.[4]
- ↑ Pandora S-1/A 2011 PROSPECTUS SUMMARY "Pandora Media, Inc." pg 1-2
- ↑ Pandora S-1/A 2011 PROSPECTUS SUMMARY "SUMMARY FINANCIAL AND OTHER DATA" pg 9
- ↑ Renaissance Capital - IPO Home "Pandora Media prices IPO above the range at $16" 14 June 2011
- ↑ 4.0 4.1 Pandora S-1/A 2011 PROSPECTUS SUMMARY "Risks Related to Our Business" pg 5-6
- ↑ Seeking Alpha "A Review of Pandora's IPO" 13 June 2011
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