The Pandora radio case study

**Southern_Lenders** · 06-14-2011 03:13 PM

have a simple question that seems to have me stumped...

Why would anyone invest in a company that has been around for 10yrs and has NEVER made a profit??

Not only this, but it seems that Pandora loses more and more money each time people use the service, yet they are going public?

" There is a fundamental problem with Pandora Media's business model: the more its product is used, the more money it loses. That's the opposite of what makes a company viable in the long term. Nevertheless, the online music service is asking public shareholders to finance its growth so it can draw more listeners, increase usage and ... lose more money, presumably. "

AND ...

" At $11 a share, the company would be valued at around $2 billion, or about 13 times sales. That number, though, is almost meaningless since Pandora itself expects revenue growth to decline, and losses are growing."

How can you have a positive valuation when you don't have a profit?

This company has bankruptcy written all over it.