Profitless Pandora Gains In Internet IPO

Originally published on June 16, 2011 1:10 pm



Online music company Pandora went public yesterday, and investors gobbled up the shares. NPR's Nina Gregory notes all this excitement is for a company that has yet to make a profit.

NINA GREGORY: Pandora is a service that lets listeners customize online radio stations, and investors are likely relying on its popularity. The service has over 90 million registered users, which makes a potential for revenues from advertising high.

The company's revenues have been rising quickly, but analysts warn the company has a bigger and significant problem looming in its future. That would be the contracts it signed with record companies.

Those contracts expire in a few years. Mike McGuire is a media analyst with Gartner and says despite that, Pandora has seen important growth in the mobile market.

Mr. MIKE McGUIRE (Media Analyst, Gartner): You cannot ignore the popularity of the product, and I think even those folks at Pandora would point out that, you know, a lot of the recent growth was due to getting that app on the version of the iPhones that came out, and a lot of the smartphones that have come out since.

GREGORY: Pandora is in the top five most used apps on all four smartphones, and is the number one most downloaded free app on the iPad.

Nina Gregory, NPR News. Transcript provided by NPR, Copyright NPR.