Pandora Increases IPO Price
Boasting 95 million registered users and 35 million active users, the internet radio provider leads the pack that includes companies like Slacker and MOG. As yet, Pandora has not been profitable, but the advent of smartphones and seamless dashboard connectivity in new cars gives the internet radio platform hope.
Earlier this week I wrote an article, “As Pandora Goes Public – Worries for Sirius XM” , speculating that the Pandora IPO would be richer than the $150 million initially anticipated. Even with a price tag in the $10-$12 range, most of the money raised will be used as a cash out for current investors. At a $12 per share price point, current investors stand to cash out to the tune of $150 million, leaving the company with roughly $50 million.
It would appear that even with an IPO, Pandora will raise just enough money to bolster operations and not have the type of money required to lure top tier non-music content. This should come as a relief to Sirius XM (NASDAQ:SIRI) investors. Sirius XM investors, as the satellite radio provider, virtually owns the highest caliber of non-music programming. While Pandora does indeed compete with Sirius XM, there are enough substantial differentiators to keep Sirius XM at the top of the audio entertainment landscape.
Another benefit for Sirius XM is that the financial numbers of Pandora’s operations are now public information and Sirius XM enjoys very favorable financial metrics when compared. In the end, there will be fans and customers to both services and the audio entertainment landscape has plenty of room.
Position – Long Sirius XM radio
It is clear to even a layman that Pandora’s IPO has as much to do with the interests of common investors as with the ocean floor research. The owners are desperate to return their moneys and, if they are lucky, will make a few bucks at the expense of idiots who would buy this lame duck. The trick is as old as this world. The only thing that will really change with the IPO for Pandora is that they will become much more transparent due to a public company status. The rest will be as bad as it is now or even worse. If pandora cannot make money at 90 million “registered” customers, when will it… at a 190 million. Their IPO and everything that comes with it is a blessing for siri be it looming FCC decision in the next month or anything else. Siri should send them a huge fruit basket with a thank you note and a black band. Pandora’s only path to a slim possibility of survival is to start charging before Sound Exchange raises its royalties on pandora and the likes. Even with massive charging, we do not know if tens of millions who cannot afford (overwhelmingly kids, students, the have-nots or misers will not be able or will not agree to pay even such change like $36 per year). Technically, public pandora will hardly have any time to live before it dies. It will only take some time to diagnose the patient with terminal disease. The owners, however, will set sail somewhere else on a nice yacht rather than a crappy boat. This is how “the smart” make money: at the expense of moron investors into pandoras.
Great comment! Funny, you hit all the right points when you said “overwhelmingly kids, students, the have-nots or misers will not be able or will not agree to pay even such change like $36 per year”. When you said misers and have-nots you covered all my friend and co-workers. You could have said Bill and Andy (my friends), misers and have-nots. I have Pandora and XM; In the past weeks the ads on Pandora have been increasing. Also there is a gap between songs more and more. I sometimes think its my connection, but later find out. Well any ways good out look on Pandora! Hope everyone makes some money and run!
Pandora. Bankrupted in 2yrs.
now now guys, ur being a bit to fanboyish, I love Sirius and have about 20k shares, but u guys have to admit, pandora is growing rev, they are starting to integrate in the car, they will likely reduce the amount of free listening soon and raise pricing a bit (they are the cheapest internet radio out there, so they have some room there) therefore pay less royalties and become profitable. Also what stops them from creating a higher tier package, like say pandora one +, get all the premium perks, plus weather, news and sports for example, extra buck per month or so. There all a bunch of things they can do, I honestly think we need to be more careful, pandora has the potential, its all on the leadership to execute.
Get your hands on their prospectus. Do you realize, the more users & revenue they make, the more they pay in royalty costs. They pretty much move in lock step.
What do you get when you do +10 then -10? You are in the same place you started. And for the last 11yrs, its been loses for SiriusXM.
This isn’t about being a fan of Sirius. This is business and Sirius is making money.
but then thing is like I mentioned, they can reduce the amount of free listening, and cut those royalty costs by atleast 30%, and at the same time, those people that constantly max it out and never pay for it might be enticed to actualy start paying for the service then. Also what do you think is gonna happened when sirius raises their rates ? everyone is just gonna be ok with it ? as it stands sirius is almost 170$ a year, price raise ? yeah thats gonna sit well when people are paying more than 200$ a year for radio. Dont get me wrong, most people will pay, but I think they are gonna suffer subscriber losses for atleast 1 quarter, and adds are gonna reduce, its simply becoming too expensive. I have had sirius for 5 years, when i first got it, I thought it was fairly priced, then the royalty, I was like ok, fine, now they wanna raise it again ? not cool. UNLESS this means the royalty fee goes away, because as far as I know, that is only to recover royalties since the merger was announced, so id assume, by next year it will be gone and replaced with a price hike.
I dont think etheir is going away, I think there is a market for both, Sirius is more geared as far as content and pricing for older croud, while pandora is more suited for the younger people.
I disagree with “+ 10 -10”. It is rather “+10 -15”. Let us not forget Pandora is still in the red after more than 10 years in business. Let us not forget that they have all kinds of DIRECT competition and it is going to get worse rather than better. As Sirius keeps getting momentum and making more and more cash (with a $2 price increase over $1 billion in 2013), they will get better and better and tougher for competitors. When companies have money, and a lot of money like in siri’s case, they take care of their competitors in the first place. Technically, Pandora is where siri was before merger with XM. The prospects for survival of both companies were bleak before merger. One of them would have gone under anyway. Pandora’s true strength is not in music genome but rather in being mostly FREE. Once they stop being free, they are finished because they will get on the same playing level field with siri with one huge issue – incomparably weaker and inferior content. Plus they will lose their demographics of kids, students and misers who cannot afford or do not want to pay and will accept only “free”. There is no way this company will be seriously profitable. And being public, makes it even worse for them because of their transparency and consequent removal of the shroud of secrecy. As I said earlier, Sirius should thank them for being around.
I agree that this is more a desperation move for Pandora. But ALL Sirius has to do to put the nail in the coffin of Pandora and its ilk is to offer similar features in Sat Radio 2.0 and their own internet offerings, and its GAME OVER.
Siriously. 🙂
Sirius already has the better working business model, CONTENT, delivery system….and is PROFITABLE.
But if Sat Radio 2.0 offers a jukebox like feature and custimizable radio abilities like all these internet radio companies….then there will be ZERO reason to choose ANY other option. Sirius will RULE. DOMINATE. It’ll be one stop shopping. All in one. All you need. Done and done.
NEXT! :-p
I would pay more for a feature that had voice command. Where you could say an artists name or song title and it would create a personalized radio station for you. If Sirius REALLY attacks Pandora and combines such features into its Sat Radio 2.0 then its game over for Pandora and its ilk in my book.
Sirius already has the CONTENT. Nobody can touch em. Sports talk comedy live music etc….but if Sirius aggressively attacks the internet and smart phone users and offers customizable stations like Pandora…i cant see how Pandora can compete.
I say Mel takes a page from Sun Tzu’s ART OF WAR….and strikes NOW. While its enemy is weak. Hard and fast. Go for the jugular. Dont pussy foot and say…we are purists and are going to stick to traditional radio. NO. Attack! ATTACK! ATTACK! 🙂
Rewind and record are cool features. And i think its cool Sirius will add such functionality thru new radios since Satellites are one way. HOWEVER….they should also aggressively go after the growing internet/smartphone crowd. This is not an abandonment as some of the radio purists say. NO. Sirius can keep its roots AND offer new high tech internet features. The kids seem to like Pandora. Not only because its free(which it wont be able to maintain without more advertisments or fees) but because its cutting edge. It satisfies that immediate gratification and sense of CONTROL and FREEDOM the internet brings.
Sirius should EMBRACE and COMBINE it with what it already does best. Then Sirius will truly have it all.
Theyve got the content. But the day is coming where people driving in their cars or wherever will just speak vocal commands into their cell phone saying a specific song or artists and BAM! Itll start playing and create a peersonalized radio station. Like it or not, this kind of control is going to be a growing part of the radio experience, and to not include it…is backwards thinking and foolhardy.
If Sirius includes such features…it will be the best of old and new. Itll have the content and the ability to create. It will CRUSH the competition.
Pandora has its struggles. Sirius has weathered theirs. This is not the time to rest tho. People will keep craving the ability to customize. Sirius has the best radio on radio. They can have the best customability too. They do this, and NOBODY would be able to touch them. They’d be the king of the Hill going into the future for audio entertainment. 🙂
Funny stuff…The Pandora IPO. They are in so much trouble that all this does is stave off disaster for a short time. SIRI is the much better service based on solid content and strong management. Sirius will be $3.00 by the end of the year. Panodra will be down significantly.
Don’t forget that SIRI has 3 billion shares out. I just don’t see how it goes to 10 or even five bucks a share without a reverse split.
Um….share buy back. Hello?! McFly!!! Lol
good luck with that. Sorry, but a couple of million shares over the next five years would be like pouring a few bottles of evian into the pacific ocean. Sirius should have had pause and rewind five years ago, and whats with the lame website and useless app. Maybe they don’t have debt because of all those shares they issued, oh yea, they also have 3 billion in debt. But they have a half a billion in cash-yippee. What a joke.
What’s all the fuss about Pandora. I am an avid music fan and nothing compares to Slacker Radio on the iPad.You can customize your stations and get high quality sound . And it’s free with a few commercials. And you also can skip up to six songs per hour per on your stations. Pay the 3.99 and you can skip unlimited songs and actually cache stations for playing without wireless or 3G needed. Can’t do that else where. You can pay 9.99 per mo and move up to pick your songs to store for playback. Slacker is just better than Pandora. Try it for free and compare yourself.