Pandora Radio launched an initial public offering (IPO) of company stock this morning, with some success. According to Wired’s Sam Gustin, the company priced the offering at $16 per share, which would value the company at about $2.6 billion. As it turned out, the stock opened at $20. From there it went up to $26, and dropped somewhat. At the end of the day when markets closed, Pandora ended up at $17.42 per share.

At $16 per share, Gustin said, the company raised $235 million. You’d think that would be a nice financial cushion, but Pandora takes a lot of money to run. In 2010, the company had revenue of $138 million, but it still lost $1.8 million. One large cost is royalties: Only about two years ago, the Internet radio industry reached a long-sought deal with SoundExchange, the agency that collects royalties for labels and artists. Under that agreement, streaming radio sites were required to pay 25 percent, or $0.08 per stream (whichever was greater), retroactively to 2006. Sites pulling in $1.25 million or less only had to pay 12 to 14 percent.

The agreement also stated that the rate per stream would go up to $0.14 by 2015. And Gustin said Pandora has 90 million subscribers. Ad revenue brings some money in, and so do subscription fees, but the stock offering should bring in some much-needed cash.

CNET’s Greg Sandoval is among those urging caution to investors. Investments in the stock market always carry some risk. With any stock, there’s a possibility that you could make money, or you could lose money. With Pandora, royalty costs are one of Sandoval’s concerns, but another is the difficulty Pandora has selling ads. Terrestrial radio stations make a lot of money on local advertising, and Sandoval said that Pandora can’t do that yet.

Pandora’s not the only company to try dipping its toe in the IPO waters these days. Groupon is on its way to the market — as Shira Ovide of the Wall Street Journal wrote, the company filed paperwork with the Securities and Exchange Commission earlier this month to have its own stock offering. More may feel bold enough to give the markets a try. It will be interesting to see who will be next.

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