Pandora Media saw its shares soar above expectations, as the US-based online radio firm floated on the New York Stock Exchange this week.
On the first day of trading Wednesday, the California-based company leapt as much as 63 percent to $26 after its debut on the New York Stock Exchange, under the symbol P.
Founded in 2000 by Tim Westergren under the name Savage Beast, Pandora makes 87% of its sales from ads that target users based on age, gender, home postal code and musical taste.
Ads support the free radio service, though the company also sells subscriptions to users who prefer to listen without advertising.
It had sold 14.7 million shares yesterday at $16 apiece, raising $234.9 million in its initial public offering. They were offered at $10 to $12.
Pandora is riding a wave of demand for technology companies after professional-networking website LinkedIn and Russian search engine Yandex provided first- day gains of at least 55 percent after their IPOs last month.
Investors are flocking to Internet offerings after they outpaced the 3 percent gain in U.S. IPOs overall this year. Pandora sold about 9.2 percent of its shares outstanding. For U.S. technology IPOs in the past year, the average float was 24 percent.
On Wednesday, Pandora rose $7.26 to $23.26 as of 10:01 a.m. New York time.
At the offering price, the company had a market value of about $2.6 billion, or about 19 times last year’s sales, compared with about 2.7 times for Sirius XM Radio Inc., the subscription-based satellite-radio service. Sirius XM has a market value of about $7.7 billion.
While Pandora will compete with peers such as Sirius, it may face a bigger risk staying ahead of established technology companies including Apple., Amazon and Google that are investing in their own online music offerings.
Startups such as Slacker, Rdio and CBS Corp.’s Last.fm, also provide competition by offering music through the Internet.
Meanwhile, Sweden’s Spotify has reached agreements with three major record labels and is close to a deal with a fourth to begin a U.S. service, which could start as soon as next month, people with knowledge of the matter said June 13.
