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Pandora Shares Got Crushed: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of online radio company Pandora Media (NYSE: P  ) plummeted 25% on Wednesday after its quarterly results and guidance disappointed Wall Street.

So what: Pandora's fourth-quarter revenue jumped an impressive 71%, but a loss of $8.2 million -- more than twice as a big as last year -- and a weak current-quarter outlook are triggering concerns over its long-term profitability. While the company continues to add listeners at a solid rate, disappointing mobile service revenue isn't keeping up with rapidly rising sales and programming expenses.

Now what: Looking ahead, management sees an adjusted first-quarter loss of $0.18-$0.21, well below the consensus of a $0.02 loss. Of course, Chairman and CEO Joe Kennedy reassured investors that Pandora "continues to rapidly disrupt the radio industry and has only just begun to realize the potential of our $37 billion U.S. market opportunity." Given the strong headwinds working against Pandora, however, I'd continue to be cautious about buying into that bull case. 

Interested in more info on Pandora? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 07, 2012, at 11:14 AM, bottomfisherman wrote:

    Pandora is garbage plain and simple.

  • Report this Comment On March 07, 2012, at 12:29 PM, bemillsz wrote:

    There must be a typo in this article. When did $0.18 or $0.21 become LESS than $0.02 ?????

  • Report this Comment On March 07, 2012, at 12:36 PM, mshiney77 wrote:

    @bemillsz They are negative numbers

  • Report this Comment On March 07, 2012, at 12:45 PM, MartinMeo wrote:

    I agree the wording is a bit confusing, but since it's a loss I think of it as a negative number.

    The article is saying that management's view is WORSE (more loss) than the consensus view.

    Mathematically, - 0.18 is less than -0.02.

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