A Day After Public Debut, Pandora Shares Dip

Pandora Media Inc shares plunged as much as 11 percent Thursday as doubts mounted about whether the online radio company would ever turn a profit and attract users away from its rivals.

Shares were trading at $16.20, down $1.22 or 7.0 percent, on the New York Stock Exchange near midday, after briefly dipping to $15.50, or 50 cents below their $16.00 per share IPO price.

At least one analyst advised investors to avoid buying the stock because shares are too pricey and do not reflect how the company will do competing against its rivals.

``In our estimation, Pandora is just not an attractive way to play. What's their competitive advantage? They don't have one,'' said Morningstar analyst Rick Summer, adding that he expects shares to tumble to $6.00.

Pandora is facing off against traditional radio companies, satellite radio provider Sirius XM Radio Inc, music services such as Rhapsody and offerings from Apple Inc , Google Inc and Amazon.com Inc .

Another major concern about Pandora is the bigger its audience gets, the more it must pay record labels in licensing fees, hurting the mostly free radio service's chances of becoming profitable.

On Wednesday in its stock market debut, Pandora shares surged 48 percent in early trade but then reversed course and closed at $17.42, not far above their IPO price. The company said it raised $235 million from its IPO.

Pandora, which has been around for over a decade, runs a service that allows listeners to create music playlists. It has about 90 million registered users.