Pandora’s IPO Raises Again, To $16
After we had just covered Pandora’s IPO raise from $7-$9 a share to $10-$12 a share, the company has just raised the price to $16 per share (nearly double of its original offering). According to Chris Nerney from IT World, this is an old Wall Street trick to raise investor enthusiasm.
Nerney argues that this is a tactic to make Pandora seem like an extremely desirable investment, whether it is or isn’t. This opens Pandora’s box (so to speak) on the first day of trading and will cause investors to pay a high price of about $30 to $40 a share. It is also likely that the stock may dip down to a low $20 in the coming weeks.
While Pandora has an exponentially larger revenue compared to last year, the company still operates at increasing losses, making this “not a safe bet to place.” Now, don’t get me wrong, I love Pandora, but please be careful before you invest a little more than you bargained for on day one of trading.
If you really had to own a piece of the pie, I recommend waiting till the enthusiasm slows to a halt and then jump on it.
Until then, invest safely and don’t let yourself lose your shirt in this economy. The lead underwriters for the initial public offering are Morgan Stanley, J.P. Morgan, and Citigroup.