Pandora IPO Raises $235 Million

Pandora, the wildly popular Oakland, Calif.-based radio service, has joined the likes of Groupon and LinkedIn as the latest big-name online company to launch an IPO, making 14.7 million shares public today on The New York Stock Exchange.

Trading under the symbol "P," Pandora originally set its shares at $7 to $9, then increased it to $10 to $12, before finally setting the shares at $16 yesterday, valuing the company at $2.6 billion.

The shares opened at $20 this morning, but quickly reached prices of up to $26, boosting company value to $4 billion. Pandora CEO Joseph Kennedy told CNBC, "The investors will determine the stock price."

Pandora has raised $235 million in the IPO, with Pandora offering 6 million shares and stockholders offering 8.7 million shares. Pandora has also granted underwriters a 30-day option to purchase an additional 2.2 million shares to cover over-allotments.

Pandora's SEC filing revealed a huge increase in sales (up 131 percent in the first quarter of 2011 to $51 million) and registered users (up 77 percent to 94 million). Despite the exponential growth of the service, it has yet to make a profit.

The mostly free online and mobile radio service began streaming in 2000 and has continuously been at the forefront of the Music Genome Project, allowing users to make a music selection, then responding with a playlist of similar songs and genres. Pandora has seen extreme growth due to use of its app on smartphones and mobile devices, but has struggled to keep up with the costs of music royalty rates and a growing staff.