Of all the recent IPOs this year, the one that caught my eye was Pandora. When Amazon went public in the mid 90’s, I remember commenting to a coworker that if I had the guts I would short Amazon, since anybody could build a website that sold books.
Luckily, I didnt have the guts as I would of lost a ton of money. But I hear alot of the same comments about Pandora, alot of potential competitors, losing money every year, greatly overvalued.
Amazon lost money every year for the first 6 years, so that doesnt bother me. What made Amazon great is the vision, management and execution of what they wanted to do. You could probably say the same about Netflix – how did Netflix beat all its established competitors – vision, management and execution.
So the bet on Pandora is do they have the vision, management and can they execute and extend their business model? Thats the question. At current valuation levels I cant get too excited about Pandora. But if valuation drops below 10, and the company starts showing signs of interesting ideas and executing, I think I might jump in.
For another take on Pandora, read Henry Blodgets summary below.