Pandora, a company incinerating cash at seemingly-impossible levels, is now stretching its finances even further. According to details first emerging on Wednesday, the billion-burning Pandora is now attempting to secure an additional $300 million in debt while its stock valuation remains guttered.
The convertible debt offering, opened to creditors this week, would allow Pandora to further bankroll a grandiose roadmap that includes an on-demand subscription play and a broad, international expansion. Already, Pandora has spent more than half-a-billion acquiring companies in the past few months, part of a cash-burning inferno that makes the movie Backdraft look like a soggy cigarette butt. The searing heat includes a curious $450 million purchase of Ticketfly and a near-$80 million acquisition of bankrupted Rdio, not to mention a $50 million purchase of analytics firm Next Big Sound.
All of that is on top of quarterly losses tipping $90 million, enough to make Wall Street a nervous bear on the stock. Shares of Pandora (P) remain 22 percent below June levels, a reality that makes the stock exchange a difficult piggybank to smash. Back in 2011, Pandora rustled $235 million from its IPO, with a secondary offering in 2013 that rallied another $250 million. But Pandora has remained profitless throughout, with top executives like co-founder Tim Westergren minting tens of million in personal gains and while pursuing lavish ‘investments’.
Meanwhile, the situation around on-demand streaming music remains a soggy and speculative mess. The freshly-bankrupted Rdio is now on life-support, with Pandora tossing an emergency $2.5 million to keep the patient from flatlining. Looking ahead, the major labels are undoubtedly preparing for a huge windfall, with Pandora a perfectly-plump target for massively-overpriced recording licenses.
More as the wildfire ensues!
Building a future investors can believe in?
So much of this reminds me of the previous tech bubble where investment was built purely on ‘potential’. After a decade Pandora is facing the reality that music streaming isn’t working. Yes, they made it to the Wall Street payoff, but now what?
They aren’t “desperate.”
I wish I could just take this reporting at face value, or that you’d at least put in a couple of links so that fact checking could be easily done (even if you just linked to your other articles). But the fact is DMN has been consistently hostile to Pandora. I have no stake or interest in Pandora, but I have had many people tell me how they discovered my music there.
If it goes under, more than half of the revenues Sound Exchange collects for digital transmissions of our music will disappear (see http://rainnews.com/pandora-is-now-over-50-soundexchanges-royalty-collections-implications-for-webcasting-iv/) and more power will coalesce under fewer distribution outlets.