Pandora Raises IPO Share Price ... Yet Reservations Grow

New IPO Price Values Company At $1.94 Nillion

PANDORA MEDIA has increased the share price offering on its IPO from $7 to $9 to $10-$12, ADWEEK reports. However, some analysts question the size of its market cap, inferring that the online music service is riding a new tech bubble more.

Research firm BTIG has recommended against buying into the company’s offering, citing PANDORA’s weak financial outlook. Even thought it expects to make a record $137 million in 2011, its expenses are rising as well; as its listeners increase, the site must pay higher royalty fees to music labels. That has forced PANDORA's leaders to hold off on forecasting profitability until 2014.

In that light, BTIG believes PANDORA stock should be valued between $4 and $6 per share. That more modest assessment is based on the fact that mobile listening hours, which comprise 60% of PANDORA’s streaming, cannibalize higher-cost desktop hours. What's more, PANDORA’s business model because users don’t engage with ads, and its 34 million users pale in comparison to the 242 million Americans who listen to regular radio.

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