Generating lots of excitement this morning, Pandora opened at $20, well above the aggressive $16 offering price of its initial public offering (IPO).
But as with numerous other recent tech IPOs, many questions have been raised about Pandora’s ability become profitable in the future – and that wariness could be an obstacle for further price appreciation in its stock in the future.
In fact, minutes after its open at the NYSE, Pandora hit $26. But the momentum was hardly long-lasting. The stock drifted lower all morning, before falling below $20 (its opening price) at 12:18pm ET. And just two minutes later, the stock fell below $19. The stock continues to hover below $19, but even at $19, the stock would be up an apparent 19 percent from its offer price.
Amid profitability concerns, tech IPOs have performed very poorly overall this year – despite the fact that many of them received lots of hype before their first day of trading.
According to IPO investment firm Renaissance Capital, there have been 27 tech IPOs prior to Pandora’s debut today. Indeed, tech companies have made up nearly one-third of all U.S. IPO listings this year, the most of any sector.
Very similar to Pandora’s performance today, those 27 tech IPOs have averaged an impressive 20 percent gain on their first day of trading.
Those gains, however, were very short-lived, with those same IPOs averaging a 14 percent decline after their first day close.
And after removing their first-day performance, just 7 companies have seen a positive return, while only 5 have managed a double-digit gain. In contrast, 16 companies have turned in a double-digit decline since their first day close.
Here’s how this year’s tech IPOs have performed: