Initial Public offering - Pandora

Angelyn Brown

November 30, 2014

FIN 516

IPO Paper

TABLE OF CONTENTS

Identify the Company and Its Industry        Page 2

Discuss Important Financial and Other Facts About the Company From its SEC Filings        Page 3

How Successful was the IPO in Raising Capital?        Page 5

What Has Happened to the Company Since the IPO?        Page 6

What is the Trend in Stock Price of the Company Since the IPO        Page 7

References        Page 8

Identify the Company and Its Industry

Pandora Media, Inc. is an internet-streaming radio service used by more than eighty million listeners. It began as a “music genome project” in 1999 designed to help buyers buy more music in music stores by using a complex algorithm to determine a listener’s preferences based on 400 musical attributes. The developers quickly realized that this was a dying industry and developed an application (App) shortly after Apple introduced the Itunes store for music streaming. Its more common name of “Pandora Radio” remains the second most downloaded App from the Apple Store to date. Pandora has over 150 million registered users with fifty million listening every day for a total of a billion hours per month. Even with all of these listeners, and with other music streaming following in Pandora’s pattern such as I Heart Radio, and Spotify, it took Pandora more than ten years to turn a profit and nearly going bankrupt on several occasions over the course of those ten years.

        Today Pandora uses its music genome software to customize radio stations that suit their personal musical preferences. This allows users put multiple genres, artists, and songs into one immense library. If a person selects one artist that they like, Pandora then uses the persons “like” and “dislike” selections to suggest other artists/genres that the person may find appealing as well. Because of royalty laws, Pandora is only available in the United States, Australia, and New Zealand. Users can be “free” or pay a nominal fee of $36.00 annually to be considered a premium user. A “free” user listens to ads every so often in order to be able to listen to Pandora. They are limited in the number of hours they can listen on a mobile device, and are also limited in the number of times they can “skip” a song or change how frequently the song is played. A premium user has no ads, no limitation of hours or skips. Even though the fee is minimal, only about five percent of Pandora’s listener base is a premium member.

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