Pandora Executives Have Now Cashed Out $87.6 Million In Shares…

The word on Wall Street is that Pandora has killed Spotify’s chances of having a successful IPO, thanks to a combination of heavy and continued losses, bad stock performance, and insane cashouts.  A big problem is that Pandora’s own executives are showing little faith in the future: according to SEC documents compiled by SECForm4.com, top Pandora executives have cashed nearly $87.6 million in shares since the initial public offering last year.

Here’s just a sample of the ongoing frenzy.

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Of course, these are the guys that built the company, and there’s no law against being rich.  But that means only so much to Wall Street, where broad-scale selloffs signal little confidence in future growth, and lots of confidence in a short-term burnout.  Indeed, Pandora execs have purchased less than $1.5 million of their own stock.

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It also makes it much difficult for founder Tim Westergren to make a serious case for lowering royalties and benefiting artists.  Westergren, whose image is cultivated around being a struggling musician and artist advocate, has cashed $13.9 million in Pandora shares alone.

Written while listening to Solar Fields.  More insider trading details at secform4.com.

12 Responses

  1. Visitor

    If you invest in a company before it goes public, you get stake in the company. After it goes public you can cash those shares in for money. Artists could be cashing in shares too had they invested but they chose to do nothing except complain. Sometimes you pay for the decisions you make. Sometimes you get paid.

    • FarePlay

      Musicians shouldn’t complain because they could have been investors? I’ve got a better question, why not have given artists an equity share in Pandora to insure their success?

      Give them some skin in the game. You want things like windowing to go away; bring the musicians to the table.

      Socialism; not really. It’s just good business to bring your key contributors in as stakeholders. Just think how much money this would have saved Pandora, et al., in marketing.

      The time may be coming for an artist owned distribution channel.

    • addamBONGGtheband

      either way, it costs money .. small investors are better off playing penny stocks for the moves .. pandora isn’t a good investment .. there’s too much competition ..

  2. Comment

    Also fair to note that many of these guys went weeks without pay when there was a lot of uncertainity in the early days. Who takes risks like that? I’m happy for this team.

    The industry should be trying to figure out how to incentive more Pandora’s instead of how to drain all the money out of Pandora.

    Instead we continue to have several different business models with no path to profitability. That’s insane.

    • FarePlay

      These comments always beg the question, do these companies have a viable business plan. If Pandora is still not a viable business with all those subs, than there is something fundamentally wrong with their business plan.

      Pandora was already granted a variance to lower their payments to artists and now they’re back to renegotiate those down rates down again. Now that they’re a public company, with shareholders and investors to answer to, I’m sure the pressure on Pandora is intense.

      Cashing out $87 million in shares certainly does not help their stockprice or confidence in their leadership.

      This has never been about stifling innovation, but rather survivability of the musician. Content is seen as an obstacle, when in reality Pandora is nothing without it.

      This argument is old and tired. Come up with a business model that works for everyone and we’re onboard.

  3. mike c.

    With a market cap of 2.2B, Pandora insiders selling 87.5M during the past year is only 4% of the total outstanding….so nothing too shocking there..

    And, at today’s price of around $13/share, Pandora is trading at a 52-week high…so, if Pandora insiders aren’t really feelin’ it, everyone else seems to be..

  4. Central Scrutinizer

    I don’t know about “faith in the future.” Business is business as they say.

    However, as you mention at the end of the article, this much cash out is something to consider when westergren is asking congress to to cut artist royalties.

    found this link over at musictechpolicy

  5. Yeahbut

    We can not back off demands for fair royalty rates from Pandora. Particularly after the favorable response we got from the Senate subcommittee that listened to their whining about how much they have to pay. And Tim and his cohorts are obviously not hurting too badly. We may actually be looking at a royalty from terrestrial radio soon if Congress grows a pair and stands up to the broadcasters. I believe that the estimate was around $6 billion going to artists and record labels if Clear Channel and the other big conglomerates had to pay at the same rates as Pandora. That would do a little to offset our losses from piracy.

    • Casey

      Our politicians have made it perfectly clear actually doing something was not in the job requirements. And the idiots we call fellow Americans have made it equally clear they will vote the same self-serving politicians back in office, year after year. Neither Pandora nor the artists will get anywhere with congress.

      As far as radio, you really think Clear Channel can afford to pay royalties? They lost over $400 million last year and they have a lot of debt coming due.

      • Central Scrutinizer

        While I disagree with your perspective on several subjects written about here at DMN, I must agree with your assessment of the U.S.political system.

        I can’t think of another system or game theory that can describe how congress operates. Where it is the players best interest to always come close to achieving something then failing then start the process all over again.

        and as for American idiots, well stupid people need representation too.

  6. Shill Lister

    …Seems the majority of comments thus far have been from the executives from Pandora. Hello Execs… if you want to negotiate, do so in good faith– not through buying congressmen.

  7. wallow-T

    “Market capitalization” and “cash flow” are two divergent concepts which many commenters here seem to have confused. .Licensing is a cash flow issue. Multiple commenters here seem to think that companies like Pandora should take market cap value and pay it out to artists; this is kind of like killing the goose who may or may not lay a golden egg.

    The history of the last few years is littered with the corpses of companies which at one time had high market capitalization.

    Perhaps one way to think of it is that market capitalization is a bet on what cash flow may become over some future time.