Gone are the days of dial-up and downloading speed. With improved internet routers and better connectivity people can share files, pictures, and music with greater ease than every. And apparently, as some companies have shown, hosting such activities can prove a highly lucrative business while charging absolutely nothing in the process. Years ago it was [...]
Gone are the days of dial-up and downloading speed. With improved internet routers and better connectivity people can share files, pictures, and music with greater ease than every. And apparently, as some companies have shown, hosting such activities can prove a highly lucrative business while charging absolutely nothing in the process. Years ago it was unheard of for a company to see a free service as a lucrative business model but several social media sites have proven that it is actually possible. Pandora is the most recent site that has gone public and with great success.
Pandora was founded more than a decade ago by Tim Westergren, and affiliates, as a free service but after going public on the market, the company is now valued somewhere in the ballpark of three billion dollars. On June 15th, Pandora’s stock opened at twenty dollars a share and started trading high. This is impressive for a company that’s never made a penny in profits from its users. At the time of writing the shares reached the 23-dollar mark.
It’s overall shares surged as much as 63 percent during their debut. The stock did pull back later in the secession closing just above seventeen dollars. This was a bit of a dip but it’s still a huge market gain that’s impressive by any standards. This is far higher than the expected 16 dollars a share price range that beat even Pandora’s highest expectations.
Pandora is just a part of a larger portrait in the new wave of Silicon Valley companies that have tapped into larger public markets. Some economists fear that, with more Internet companies going public, this will lead to a technology bubble that’s just waiting to burst. LinkedIn and Fusion-io are two other companies that have tapped into the power of public market trading and have done quite well for themselves. With this success, more and more companies will take further steps toward open market involvement. And with a market desperate for more product, it’s feared that if there’s a sharp decline in share value that this burgeoning new market will quickly pull many investors down with it.
Even with Pandora’s obvious success there remain many skeptics as to the company’s future prospects. The company has run a deficit and the amount of royalties has remained disproportionate in comparison to the money that it’s bringing in. The company has suffered an uninterrupted sting of losses that’s totaled out to around 92 million due to theses factors. It’s that that, unless they can increase their subscribers or offer new material, these losses will likely grow. Not everyone is so skeptical of Pandora’s prospects. The company is still doing quite well in most regards and many are hopeful that the market will prove that there is promise for similar companies going public.
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