In the following video, Isaac Pino and Jeremy Bowman team up to review important issues investors need to watch regarding Internet radio company Pandora.
The first issue is growth. Pandora currently boasts a membership in the 60 million range, claims a 7% market share, and has yet to really break into the automotive or consumer electronics market. Currently, Pandora is almost doubling year over year; can it sustain such growth rates?
Second, there's revenue. Pandora uses an advertising business model rather than a subscription model as Sirius XM Radio does. For all its members, Pandora hasn't turned much profit. If Congress passes the Internet Radio Fairness Act, that could help improve profit margins.
Finally, Isaac and Jeremy consider international markets. Spotify came to the U.S. from Europe, but Pandora hasn't penetrated the European market. It does have a foothold in Australia and New Zealand, but potential markets in other overseas markets remain untouched.
Pandora has won millions of devotees among music fans but few supporters on Wall Street. The online jukebox has put up dramatic growth numbers in its listenership and seems to be redefining the way we consume music, a transformation that's only likely to grow. But high royalty rates and competition from all corners threatens to silence this upstart before it ever grabs the microphone. Can Pandora translate success with its listeners into a prosperous business model that will deliver for investors? Learn about the key opportunities and potential pitfalls facing the upstart radio streamer in The Motley Fool's new premium research report. Not only will you get the kind of insight normally found from high-priced Wall Street brokerages, but you'll also receive a year's worth of free updates. All you have to do is click here now to activate your subscription to this invaluable investor's resource.