Pandora Ipo

Pandora IPO

1. Identify the company and its industry.

Pandora Media Inc. is an internet radio service and recommendation service. Users enter the song or artist that they enjoy and the service responds by playing selections that are musically similar. It has begun services on your computer but has expanded to be one of the services found on many network media players, media streamers and network TVs, Blu-ray players, AV receivers and many more devices for the home (Silva, R, n.d.). It is one of the most popular streaming music services today. With 81 million users and growing, it seems that most people have at least heard of Pandora (Silva, R, n.d.). It is a great app that can play you just the music that you liked and any similar music. It is tailored to each listener. This is through a process called seeding with The Music Genome Project, a complex mathematical algorithm combines genes cataloged with individual collective feedback to suggest songs and personalize playlsit.

The company was founded in the year 2000 and the idea was to create a separate, individualized radio station that each user can say that it is “good” music with none of the “junk” that other users like. Will Glaser, John Kraft and Tim Westergren founded the company (Pandora Radio, 2017, June 08). Despite its today’s success, its origins are very humbling. The company has asked its 50 employees to work for “deferred” salary or basically to work for free. According to the article “Origin Story: The Founding of Pandora Radio”, it has accumulated to $2,000,000 in back payroll and 5 employee lawsuits. They were so cheap, they couldn’t hire a lawyer that can tell them that that was illegal. In 2005, they basically relaunched the business and was able to triumphantly pay out the $2,000,000 back payroll. They were able to make Pandora’s potential a reality.

2. Discuss important financial and other facts about the company from its SEC filings, especially the main S-1 Report.

Pandora media, Inc.’s Form S-1 reports was filed with the Securities and Exchange Commission on February 11, 2011. As of January 31, 2011, the company had issued and outstanding of $151M shares of common stock held by approximately 137 stockholders; 403k shares of common stock issuable upon exercise of warrants at a weighted average exercise price of approximately $0.71 per share; and 33M shares of common stock issuable upon exercise of outstanding stock options. The company’s revenue has increased drastically from fiscal year end 2009 to 2010, $19M to $55M respectively. The company wants to expand. The company derives revenue primarily from advertising (primarily from display, audio and video advertising, which is typically sold on a cost per thousand) and subscription fees (sale of access to premium version of Pandora internet radio, it is