Pandora shares plunge on day two


The euphoria associated with Pandora Media as a hot Internet stock evaporated in the company’s second day of trading on the NYSE. Shares of the streaming “radio” company opened at $16.99 on Thursday (6/16), down 43 cents from the close of the first trading day, and soon fell below the $16.00 IPO price.

The stock traded as low as $15.50, but then recovered a bit and by noon (ET) was hovering around the $16.00 IPO price.
If the stock stays down and closes below the $16.00 mark at Thursday’s closing bell this will be a “busted” IPO – one that failed to maintain its issuing price. That reflects badly on both the company and the underwriters.

The pricing was extraordinary to start with. The expected range had been ratcheted up in the final days before the IPO was sold – from an initial $7-9 range to $10-12 and then the actual pricing at an astounding $16. That was despite tons of negative press about the company having no near-term prospects of turning a profit and a business model that guaranteed rising costs that would make it difficult to ever become profitable.

RBR-TVBR observation: The NYSE has egg on its face for pursuing this “hot” stock listing to the point that it gave a rare and coveted single-letter ticker symbol (“P”) to a start-up with a tiny public float and negative cash flow. Now that the price slide has begun, how far will it go? A couple of analysts who denounced the IPO price as greatly inflated had put out their own estimates that the stock should be worth $4-6.