Things have been a bit rocky for Pandora lately, with the loss of its CEO, a quarterly report that saw its losses increase year to year and the introduction of yet another competitor in the market with the launch of Apple’s iRadio. So the company is looking for a quick cash infusion.
Pandora is offering of 10 million shares of its common stock, it was announced Tuesday. Shares of Pandora rose 5%, or $1.20, to $25.19 a share on the news.
The stock will be sold at $23.99 a share, its closing price on September 13th, it was revealed in a filing with the Securities and Exchange Commission. In addition, Pandora also says that it intends to grant its underwriters, which include JPMorgan Chase, Morgan Stanley and Wells Fargo, a 30-day option to purchase up to another 2,100,000 shares, if they choose to.
All in all, this transaction could net Pandora roughly $280 million.
The new money will be used for “general corporate purposes, including working capital and capital expenditures,” as well as some potential acquistions.
In addtion, it was also announced that Crosslink Capital, is looking to sell four million of its own shares of the company, reducing its stake from 16.45% to 13.42%, but still retaining its position as Pandora’s largest shareholder.
Pandora needs to raise this money to keep ahead of a space that becoming more and more crowded. Every big name company out there seems to want to be in the music streaming business.
That includes Microsoft, Nokia, Google and even Twitter trying to carve out their own piece of the pie. Its most notable new competitor will likely be Apple’s iRadio, a Pandora-like service that will be launched on iOS 7 on Wednesday.
While Pandora remains the second most downloaded free app of all time (after Facebook) in Apple’s App Store, iTunes dominates the digital music market, accounting for 63% of all paid music downloads. Apple recently sold its 25 billionth song, with 15 billion of those songs being purchased in the last three years.
Despite Pandora recently hitting 200 million users, doubling its userbase in two years, and beating expectations n the second quarter of 2013, there have been some signs of trouble on the horizon.
While the company generated $157.4 million in revenue, beating out Wall Street’s estimates of $156 million, and saw its revenue go up 55% year to year, it also saw its loss grow in that time. The company’s second quarter EPS came in at a loss of $0.04, while analysts were expecting a profit of $0.02 per share.
Pandora also recently underwent a change in leadership. Pandora CEO Joe Kennedy announced his intention to step down in March. Kennedy, who led the company through its highly successful IPO, said he wanted to move on to other opportunities.
He was finally replaced by Brian McAndrews, a managing partner at Madrona Venture Group, last week.
Pandora is not the only music streaming company that looking to raise funds. Earlier this month it was reported that Spotify is looking to raise an unspecified amount of new funding, at valuation of 35 billion kronor, or $5.27 billion.
Pandora could not be reached for further comment.
(Image source: http://www.pandora.com)
