Shares of Pandora (NYSE: P ) are up after the company announced it will be issuing 14 million new shares -- 10 million from the company and 4 million from venture capital firm Crosslink. Motley Fool analyst Michael Olson thinks that this is pretty bad news -- Crosslink, the company's largest shareholder, is bailing out, and he sees it as a sign that investors should as well.
Despite Pandora's performance this year, Michael is distressed by the fact that Pandora's cost per user has increased and that the company still isn't really making money. In addition, Pandora needs the music companies more than the music companies need Pandora, which makes Michael think that investors' best move is to stay away.
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