Does Pandora's Recent Share Offering Signal Its Run Is Finished?

Online radio company Pandora Media (NYSE: P  ) shocked many tech investors earlier this week when it announced that it plans to raise some serious capital. 

And while oftentimes investors treat such dilution with the utmost contempt, the market reacted quite the opposite way. In fact, Pandora's shares soared nearly 5% higher in the trading session following the announcement. This is undeniably a shrewd move on management's part by capitalizing on Pandora's sky-high share price. However the business is also facing a series of looming risks that would have many investors shaking in their boots. In this video, Fool contributor Andrew Tonner breaks down Pandora's announcement and why it might not prove as delightful as investors initially thought.

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Comments from our Foolish Readers

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  • Report this Comment On September 19, 2013, at 12:10 PM, NotshortP wrote:

    Hmmm, i wonder who is short P. less than 8% share of the radio world so far. Radio world moving to streaming. More cash to help capture some of the other 82%. And ur argument is competition? Thats like saying there can only be one profitable FM station. Its a big pie mr tonner and P is holding the largest cake knife.

  • Report this Comment On September 19, 2013, at 12:24 PM, gr8twhtebuffalo wrote:

    I wanted to buy in under $25 but I don't think Pandora will slip back down. Got in this morning at a hair under 27....running with this bull.

  • Report this Comment On September 19, 2013, at 1:24 PM, TMFTheDude wrote:

    @NotshortP: To keep with your analogy, what about Apple's $140 billion and Google's $56 billion knives, compared the near $300 million that Pandora has in the bank?

    I agree there can (and probably will) be multiple winners in this space. To me between Pandora's challenged economics and lofty valuation, it seems fair to say the company is grossly overvalued.

    I'm not short P, but I am definitely thinking about potentially opening a position. Either way, the Fool has a disclosure policy (http://www.fool.com/Legal/fool-disclosure-policy.aspx) wherein each employee must disclose his/her current holdings publicly on their profile page. Employees are also forbidden to write about a company in the two business trading days before or two business trading days after any purchase or sale they make. So rest assured, I'm also not short Pandora, but if that ever changes, it will certainly be transparent.

    Thanks for the commentary and Fool on!

    -Andrew Tonner

    TMFTheDude

  • Report this Comment On September 20, 2013, at 4:17 AM, NotshortP wrote:

    Thanks for the response and i do appreciate your disclosure and perhaps not you personally are short. However with the 25% short interest in the stock there is obviously incentive to bash this stock as evidence by the continued onslaught of articles by you and others so eager to highlight the potential downside but never mention the real truth that the company is making headway and is a viable long term player in the streaming sector.

    "Challenged economics"? what about the new ceo? What about the continued show of ability to increase mobile revenue? and the continued growth in the car dashboard arena? Doesn't that AT LEAST show real potential long term?

    Your article and the title and so many other articles flooding the media continue to suggest dooms day scenarios but never the other side. Why?

    Perhaps valuation is lofty currently but look at a stock like netflix? Did valuation ever stop it from surging?

    Im just sick of the incessant one sided articles bashing this company.

    I can't help but think it has to be the shorts and their friends' futile attempts to reverse the upward momentum of this stock.

    I hope they soon realize they are but futile attempts and cut their losses and we can all once again enjoy truthful unbiased reporting.

    Cheers,

    S.

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