Pandora files to raise up to $279.4 million by selling 12.1 million shares
With its stock hitting an all time high of $24.43 per share last week, and having increased by 161.33 percent year to date, it's fair to say that investor appetite for Pandora shares is fairly strong.
Right on cue, the company filed a prospectus with the SEC today to raise $230.8 million dollars through the sale of 10 million shares at a price of $23.99 per share. This offering size is before an optional underwriter's over-allotment of an additional 2.1 million shares – which would raise the company's proceeds to $279.4 million. The offering would therefore dwarf its $90 million IPO in 2011 by a factor of three.
In conjunction with the sale of shares by the company, existing shareholder Crosslink Capital will sell an additional 4 million shares, making the total offering amount $45o million. Crosslink owns a total of 28,973,418 shares prior to this offering, representing 16.45 percent of the company. Following the sale, and the issuance of new shares in the company, it will own 13.42 percent.
According to the offering prospectus, Pandora had 200 million registered users as of July 31, 2013, 150 million of which had accessed the service through a mobile device. The company also noted that it streamed 3.88 billion hours of radio in the three months ending on July 31 and had 71.2 million active users during the final 30 days of that quarter. Research by Triton Digital Media indicates that Pandora holds more than a 70 percent share of internet radio market. The company's music catalog currently includes "over 1,000,000 uniquely analyzed songs from over 100,000 artists, spanning over 500 genres and sub-genres."
Despite the company's recent popularity among investors, Pandora has faced a steady drumbeat of criticism from musicians and labels over the royalties it pays. At the same time, the company seems to have failed in its attempts to usher the Internet Radio Fairness Act into law with the goal of further limiting the amount it would have to pay to copyright holders.
Pandora had $68.9 million in cash and short-term investments as of the July 31, and posted a net loss of $36.4 million over the first six months of 2013 on $233.7 million of revenue, as compared to a $25.6 million loss and $160.0 million of revenue over the same period in 2012. On the heels of the end-of-day announcement, the company's stock is down 4.54 percent to $22.90 in after hours trading.