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RAIN NEWS FLASH: Pandora sets IPO terms at $1.3 billion valuation

Posted on: 06/03/2011


Various financial websites are reporting this afternoon that Pandora has filed a proposal with the Securities and Exchange Commission to sell about 5 million shares in its upcoming IPO at a price of between $7 and $9 a share, which would value the company at about $1.3 billion.

See coverage of the Oakland-based company in the San Jose Mercury News here or the L.A. Times here.

RAIN ANALYSIS: This valuation is almost exactly as predicted in our “RAIN State of the Industry Address” as presented at RAIN Summit North in Toronto last March, RAIN Summit West in Las Vegas in April, and at the Radio Ink ConVergence conference in San Jose last month.

It’s consistent with the fact that Pandora’s current AQH audience is roughly equal in size to that of a 3.0-share FM radio station in every U.S. market — with all of those stations having shares that have been growing at the rate of about 100% per year.

Pandora’s market capitalization at this share price would equal the total of the market caps of such pureplay radio broadcast companies as Entercom ($330 million), Cumulus ($180 million), Saga ($150 million), Radio One ($120 million), Emmis ($40 million), and several others combined.

Doing some estimates for the approximate values of the radio divisions of larger media companies, we believe this would make Pandora the nation’s fourth-highest-valued radio broadcaster, after Sirius XM and Clear Channel Radio and just behind CBS Radio. If Pandora’s stock price rises after the IPO, it could easily move to third place. — KH

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