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Updated from 9:27 a.m.

NEW YORK (

TheStreet

) --

Pandora

(P)

debuts on the

New York Stock Exchange

Wednesday pressuring

Sirius XM

(SIRI) - Get Sirius XM Holdings, Inc. Report

shares.

Pandora shares surged more than 50% out of the gate

, opening at $24.80.

The Internet radio company's initial public offering was priced at $16 a share, significantly more than its indicative range of $10 to $11 a share. The company raised $235 million, selling 14.7 million shares. The deal values Pandora at $2.6 billion.

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Shares of Sirius XM fell more than 2.5% in premarket trading Wednesday, and has closed at or under the $2 mark for the last three trading days. The stock has fallen 18% since hitting its 52-week high of $2.44 at the end of May.

>Click here to take our Sirius XM poll.

But are Wall Street's jitters warranted?

Sirius has been growing its subscription base, adding 373,064 new users during the first quarter and bringing its total to a record of 20.6 million. The company is heavily reliant on subscriptions to drive revenue, with just 2% of its revenue coming from sponsor messages.

In comparison, Pandora now has more than 90 million registered users, and accounts for more than half of the Internet radio market. Unlike Sirius, Pandora is a free service, supported by advertising, which accounts for 86% of the company's revenue.

Pandora also offers a subscription service, which charges $36 a year for unlimited, commercial-free music streaming and other premium content.

In breaking down the numbers, Pandora is just 4% the size of Sirius and has only 2% the number of subscribers.

But any time you throw out the word "free" it is sure to elicite nervousness, and the question is will Sirius retaliate by attempting to compete on price with Pandora?

The immediate threat to Sirius from Pandora is Pandora's move to partner with automakers. It has already struck deals with

General Motors

(GM) - Get General Motors Company (GM) Report

,

Toyota

(TM) - Get Toyota Motor Corp. Sponsored ADR Report

and

Ford

(F) - Get Ford Motor Company Report

, among others, to make its service compatible in cars. While Pandora may not offer the breadth of content Sirius does, it is free, which can be an allure for cash-strapped users.

Still, there are several catalysts that could potentially move Sirius' stock, including the launch of Sirius XM 2.0 later in the year and a potential rate hike.

-

Reported by Jeanine Poggi in New York.

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