Pandora IPO Is An Epic Failure As Shares Plunge

Michael Convente June 16, 2011 0

It looks like Pandora hustled Wall Street investors (unfortunately, including myself) pretty good the last two days.  The stock closed yesterday only a few percentage points up from the IPO price of $16, which again was not easily obtainable by the general public.  But it's way worse for investors today, as shares as of Pandora now are trading down around 15% to a share price of $14.51 – and they could go down a lot more.  Barron's is reporting that analyst firm BTIG is recommending a hard sell on Pandora, with a target price of $5.50 a share.

Though my small loss won't break my own investment portfolio (though I was mostly looking to day trade the first day for some quick profits and got pretty much destroyed, the dollar amount I invested wasn't too high), many investors who poured tens of thousands into the company are looking at huge losses.  I suppose the only good thing here is that investors seem to be at least a little bit more wise than during the dotcom boom and bust in the late 90s.  A bad investment manifested itself literally within two days of the IPO, rather than years down the road.

The Pandora IPO should give investors much caution about investing in any social media and web 2.0 tech companies that aren't making money and have very low barriers to entry (I'm talking to you, Groupon).  Zynga might be another story since they are already turning a profit, but their opening target price will likely take a hit as a result of Pandora's utter failure.

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