Pandora's Stock Dives ... But Will It Rebound?
October 27, 2015 at 5:16 PM (PT)
PANDORA'S stock has plummeted approximately 33% in the days following its Q3 report (NET NEWS, 10/22), which found that third-quarter 2015 total revenue rose 30% year-to-year to $311.6 million, with ad revenue up 31% to $254.7 million (local up 52% to $63.5 million), subscription and other revenue up 26% to $56.9 million, and mobile up 36% to $255.2 million. According to SEEKING ALPHA, the problems are poor subscriber growth and reliance on ad revenue, where "sales and marketing expenses are increasing by over 9% each quarter, yet listener hours and active listeners are not following."
In a conference call, PANDORA executives blamed their current situation due to the debut of APPLE MUSIC and the payouts to labels for pre-1972 music. According to MOTLEY FOOL, "The question is, is ... this is a one-off quarter in terms of APPLE's effects on his company, or will APPLE MUSIC continue to impact PANDORA's results?"
Ironically, despite its stock woes -- or maybe because of it -- a couple of WALL STREET firms have become more bullish on buying PANDORA stock. INVESTORS.COM reports that MACQUARIE CAPITAL upgraded PANDORA to outperform from neutral while maintaining a price target of 19. Analyst AMY YONG said in a note, "The impact of APPLE echoed throughout the space this quarter, leading to a one-time marketing surge from all players (SPOTIFY, etc) "despite APPLE's efforts to grow APPLE MUSIC, it will be difficult (for APPLE) to gain share. PANDORA can both hold its own vs. the competition and simultaneously improve user metrics. We see numerous levers of growth PANDORA can pull to monetize its user base and keep its dominance in audio entertainment."
FINANCIAL WISDOM WORKS reported that "VETR upgraded shares of PANDORA MEDIA from a sell rating to a strong-buy rating in a research report released on MONDAY morning ... VETR currently has $17.65 target price on the Internet radio service’s stock."