Pandora IPO story updated with closing share price information.NEW YORK ( TheStreet) -- Shares of Pandora Media ( P) surged more than 63% in their market debut Wednesday, as strong investor interest in the social media sector continues. But while the stock hit $26 at one point during morning trading -- which valued the company at more than $4 billion -- shares later fell to close at $17.42. The company raised $235 million in its IPO Tuesday, selling shares at $16 a piece.
And in March, Amazon introduced its Cloud Drive service , an Internet service that lets customers store music and play it on their smartphones or computers. Google has also announced a similar service called Music Beta. In terms of pure-play Internet competitors, start-ups and apps like Rdio and Slacker offer services very similar to Pandora's. Another significant problem facing Pandora: the sustainability of its business as its popularity grows. The company will be forced to increased pay royalty fees to music labels as its user base expands. In addition, as more listeners gravitate to Pandora's mobile app, the company will need to further utilize audio ads which aren't as lucrative as display ads, said Tom Taulli, an independent IPO analyst. "I'm bullish short term ... Pandora is tapping into some big trends there," he said. "But long term there are some clear issues with sustainability." --Written by Olivia Oran in New York.
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