care to take a guess on the opening day market cap? i'm thinking 400-500M.
Still seems weird seeing a company that's not even profitable yet go public. I don't expect the initial demand for their stock will be that high, despite the growth.
Plenty of companies go public before becoming profitable, it's a way to raise capital. Tesla Motors comes to mind for a recent example. Same for Clear.
Exactly. The entire purpose of opening your company up to the public is so that you can raise more money than you would otherwise get privately. Yes, the shares would probably be discounted for lack of profitability, but perhaps the timing is right for them. I don't know.
Tesla was nowhere near profitability when they went public. Pandora just has to wait a few more quarters before getting access to a natural flow of cash. That's what I found strange.
Their revenues in the same 9 months of last year were $31m, so they have tripled their revenues year on year. Over the same period their costs less than doubled.
If one were to extrapolate this growth rate forward by just one year (a bit crude, but makes a point), they'd end up with $270m revenue, on $170m costs so $100m profit.
They are now breaking even - which is a simple metric of a sane business/proven model, doing significant revenue and growing very quickly. So now they are in an attractive state for the markets.
In terms of strategy, Techcrunch shows their first VC round was back in 2000, with significant further rounds in 2004 and 2005. One could safely assuming the overriding factor is that VCs will be looking for an exit.
An IPO will also provide the company with significant injection of operating cash, along with liquid paper (stock) with which they can use in further acquisitions