The online music service priced its shares at $16 for an IPO, but the public was willing to pay more, valuing the company at nearly $3 billion
The stock market faltered on Wednesday, but there was at least one bright spot: The debut of Pandora Media on the indexes with the symbol 'P'. With an initial public offering (IPO) price set at $16, Pandora's stock opened at $20 and spiked at $26 before settling down.
The online music service had initially targeted its IPO price at somewhere between $10 and $12. By bumping that number up before the debut, "its underwriters succeeded in pricing the issue closer to market, leaving less money on the table after the initial public offering," according to the the New York Times' Dealbook. And the number they picked seems to have been very close to what the public was willing to pay. The stock closed at $17.42, less than $1.50 more than the IPO set, and the company raised more than $230 million.
And there's more to be made. Pandora only made about one-tenth of its shares available to the public. "Such small floats tend to lead to big, first-day stock pops as investors clamor for a fixed supply of stock," according to the Wall Street Journal's Deal Journal. And clamor they did. At close, the company's market capitalization was close to $2.8 billion.