If you were excited about the Pandora (NYSE:P) IPO yesterday, good for you. The company offers an awesome service, at a very affordable price, and I think its doing a great thing for the music business and its customer base. However, financially the company is a train-wreck waiting to happen, and investors are beginning to show that they share this sentiment.
After surging out of the gates yesterday, when the stock gained about 60% in value in its first half-hour on the market (reached $24/share) a massive sell-off ensued. Share prices slid gradually the rest of the day Wednesday, closing at $17.45, a gain of close to 8% on the day. This morning Pandora (NYSE:P) stock continues to reel, down almost 10% in trading so far at most recent price of $15.75. The stock has now officially dipped below its IPO price of $16 per share. For just its second day on the market, this drop-off does not bode well for investors who stake their bets on the internet radio leader.
Many considered Pandora’s IPO to be the catalyst for the next big wave of web 2.0 IPOs, which has already included social networking websites LinkedIn (NYSE:LNKD), RenRen (NYSE:RENN), Yandex (NASDAQ:YNDX), and will feature future public debuts of hot social-media and web-based company’s Zynga, Groupon, Twitter, and Facebook. Compared to its recent IPO brethren, Pandora looks like a sinking ship.
Consider the LinkedIn (NYSE:LNKD) debut, which saw the company’s stock value double on its first day on the market, and top out at prices close to $120 per share. Though down significantly from earlier high water marks, the company has still handed IPO investors a lucrative net return, currently trading at $71.80. LinkedIn has yet to trade below its IPO price, whereas Pandora is already netting in the red on its second day of trading.
Whether or not it is appropriate to compare the two companies, the Pandora IPO has withered in comparison to LinkedIn’s debut. Yesterday we reported that consensus among analysts and professionals was that even at IPO pricing, Pandora (NYSE:P) was a dubious buy. Trefis.com predicted a serious price check for the company, setting a target of $10 per share in the near future. Now even that mark looks optimistic.