Pandora (P) - a rational investment?

Pandora IPO at $16 a share despite lack of profit


The rise of the Pandora stock valuation is striking against the backdrop of the company's continuing inability to turn a profit and it expectation that it will continue to lose money through the 2012 fiscal year.

Much of Pandora's inability to garner profits stems from its biggest cost: royalties for the music it streams.

The company makes money through its ad-supported stream or its premium plan which offers higher audio quality and no ads for $36 a year.

Despite its current lack of profitability, the new public demand for stock in the company has skyrocketed for the site that offers members the ability to make their own radio station through selecting their favorite songs.

Pandora will begin trading Wednesday on the New York Stock Exchange under the ticker symbol "P."

Comment: Trading as P. I avoid IPO's.

Image: Pandora's box: "Pandora's box is an artifact in Greek mythology, taken from the myth of Pandora's creation around line 60 of Hesiod's Works and Days. The "box" was actually a large jar (πιθος pithos) given to Pandora (Πανδώρα) ("all-gifted"), which contained all the evils of the world. When Pandora opened the jar, the entire contents of the jar were released, but for one – hope. Today, opening Pandora's box means to create evil that cannot be undone."

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