Pandora IPO: Has the new tech bubble already popped?

Pandora’s trading debut on the New York Stock Exchange (NYSE) went well, but it wasn’t met with the same fanfare that greeted LinkedIn, a business social network went public in May.

Pandora’s lackluster first day raises questions of whether the rest of the companies planning to go public in the most recent batch of Web 2.0 companies — which also includes group-buying web service Groupon — will continue to appeal to investors.

Shares of Pandora Media rose as much as 63 percent from their initial public offering price of $16 and were trading as high as $26 after the company made its debut on the NYSE. But that slowly tapered off throughout the day, and Pandora ended the day trading at $17.42 at the bell. Shares of Pandora were down around 0.2 percent from its price at the close to $17.38 most recently in extended trading after the bell.

By contrast, LinkedIn’s trading debut went extremely well and the company now has a market cap of around $7 billion, well above the valuation of $4 billion it claimed when it priced the shares of its initial public offering between $42 and $45. Shares of LinkedIn traded as high as $122, giving the company an implied valuation as high as $11 billion shortly after its IPO. But LinkedIn is also profitable, with the company reporting that its first quarter revenue in 2011 was up 110 percent to $93.9 million over the same quarter a year earlier. Net income increased to $2.08 million in the first quarter of 2011, up from $1.81 million in the first quarter last year. By contrast, Pandora has not posted profits in 2010 or 2011.

LinkedIn’s glamorous IPO as well as some of the hyper-valuations of other Web 2.0 companies have sparked some concerns about whether Silicon Valley is entering another tech bubble. Companies like Facebook, Zynga and Pandora have seen ballooning valuations unconnected to their underlying financials, as investors have rushed to snatch up as many shares as possible ahead of what could be some of the most high-profile tech IPOs to date. Facebook, for example, was valued at $50 billion after its most recent round of funding, although it is trading at a higher price than that on secondary markets.

Pandora on Tuesday night set the price for 14.7 million shares at $16 a share in its initial public offering, which raised around $235 million. That’s up from the company’s original IPO pricing of between $7 and $9, which gave the company a valuation of $1.3 billion. LinkedIn also followed a similar strategy, ramping up its IPO pricing to increase its claimed valuation from $3 billion to $4 billion in less than two weeks.

Pandora runs an online service that lets its users pick genres, songs and musical groups and then builds a radio station that caters to that style of music. Listeners can access the service through a website or a desktop application. Pandora also has applications for the iPhone, Google’s Android mobile operating system and other mobile devices.

The company now has about 94 million registered users and 800,000 songs in its online music library, according to its most recent filing. That’s up from 53 million users in the first quarter last year and 82 million registered users at the end of its 2011 fiscal year. Of those registered users, 34 million are considered active users as of the end of April, up from 18 million at the same time last year and 29 million at the end of its 2011 fiscal year.

Pandora brought in $51 million in the first quarter this year ending April 30, more than double its revenue of $21.6 million in the first quarter last year. The company lost $6.8 million in the first quarter this year, up from around $3 million in the same quarter last year. Pandora brought in $137.8 million in its 2011 fiscal year and lost $1.8 million during the same period.

Advertising has accounted for more than 90 percent of the online radio service’s revenue for most of the site’s life, according to the filing. But revenue from Pandora’s subscriptions, which lets subscribers skip the advertisements that otherwise come on occasionally between songs, has been growing steadily. Subscription revenue now accounts for around 15 percent of the site’s total revenue as of the end of April.