Is Apple's iTunes Radio About to Crash Pandora's Party?

The market had largely ignored the potential ill effects that tech giant Apple's (NASDAQ: AAPL  ) recently launched iTunes Radio could have on streaming radio leader Pandora Media (NYSE: P  )  -- until Monday, that is.

Only days after launching the service, Apple rocked Pandora investors by announcing iTunes Radio had already logged an impressive 11 million users. Pandora investors headed swiftly for the exits, giving Pandora shares more than a 10% haircut in the process.

And while 11 million users is a fraction of Pandora's installed base, such swift adoption by so many people bolsters the idea that Apple's new service is a serious contender.

So, will Pandora's recent slide continue? In this video, Fool contributor Andrew Tonner gives his reasoning as to why Pandora's pullback should just be getting started.

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Read/Post Comments (9) | Recommend This Article (3)

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  • Report this Comment On September 25, 2013, at 9:26 AM, hthussein wrote:

    I agree.

    Apple controls 45% of US smart phone market. Which is roughly half of Pandora's active users. From the initial 11 million users of iTunes Radio, It looks like a significant number of iOS users will use and move to the more intigrated radio from Apple. Which only spells out trouble for the barely break even Pandora.

    Current share price at 24.25/share is not only does not make sense to sane investors, it does not take into consideration any iTunes Radio impact to their model.

    I expect Pandora to trade in the 10-12 range within few months once iTunes Radio releases more milestones for the new service.

    Sell Pandora if you want to keep your shirt on. Or at least buy 3-6 month put options at much lower strike to cover in the most likely event of a share breakdown.

  • Report this Comment On September 25, 2013, at 10:40 AM, stevsheppard wrote:

    I would swear the writers at fool have all shorted Pandora. Constantly pounding P with negative articles about how itunes radio is gonna bury pandora. I use Pandora, i have stock, i would never and will never pay itunes ANY amount of money for radio. As well it will never ever be compitition for pandora, they are not even in the same league when it comes to internet radio. Just cause its apple does not make them magic. They have the same rich, exclusive apple lovers as always and their market will remain that way. If anything i see iradio as a gimick to push itunes sales. Another product i would not pay for. Free music is what radio is about and pandora has it plus the genome project to make it personal. Motley Fool is the fool here, as usual. After all their grave digging for P, its on f

  • Report this Comment On September 25, 2013, at 12:14 PM, Hoptopia wrote:

    Now they will be moving back to free unlimited use... until they implode.

  • Report this Comment On September 25, 2013, at 12:52 PM, Emoebius wrote:

    I Radio is going to kill Pandora at least 50% of their target market. Anyone with an iPhone will not listen to pandora. The Apple giant has 10x the licenses than Pandora does and 100x the market cap. Do the math short this stock if you are smart. I sold all my shares the day I used iRadio it's user interface and music selection is killing pandora let alone maybe 2 commercials I've heard by the way for free.

  • Report this Comment On September 25, 2013, at 2:23 PM, NotshortP wrote:

    Stevsheppard - ur totally right! I called out mr tonner on his last blast article and he said he wasn't short but thinking of shorting. Bs! I'd bet money he has a short position in a buddy's account. No other explanation for the continued bashing desperate attempts to reverse the upward trend. Hopefully all the shorts will continue to relaize they are but futile attempts and we can watch the squeeze take the stock higher.

    Everyone seems to forget or ignore the fact that streaming radio is really just beggining. P Only has 8% share of radio so far. As more and more fm listeners continue to switch over to streaming that share will grow. There is plenty of room for iradio, spotify, and P to share the growth. They all have their plusses and minuses but the lead p has in the car dashboard area is their main advantage

    The continued growth in streaming will also lead to more and more advertisers switching to localized streaming ads and we'll watch p profits soar in the next two years.

    Another point - i download music after hearing on p at least once a month. As more artist realize the benefits they r getting from exposure on streaming services less and less will want to continue to fight p's efforts to lower licensing fees and perhaps apple will join in their efforts and there will be legislation passed to get streaming a fair chance and be more on par with what fm pays artists - which is nothing.

    On that note- does anyone know if p gets a share from apple when i hear a song i like on p and hit the download song button that takes me to itunes to buy the song?

    Cheers,

    NotshortP

  • Report this Comment On September 25, 2013, at 6:47 PM, Jaybones21 wrote:

    Stevsheppard- iTunes Radio is free!

    Notshortp- stop doin it the hard way every month and just use iTunes Radio and click buy when you like the song.

  • Report this Comment On September 26, 2013, at 12:45 AM, NotshortP wrote:

    Jaybones, ur killing me with "the hard way" comment. Really?? its literally 1 extra click of the mouse!

  • Report this Comment On September 26, 2013, at 3:21 AM, Frosty2nd wrote:

    So far iTunes Radio is a hit or miss when it comes with music selection for me. Maybe it'll take time for iTunes to learn my music preference, but in the meantime I find myself going back to Pandora more. I wonder if this is the case with other music lovers out there. I'm an Apple fan with many of their products, but when it comes to internet radio I'm going for Pandora... for now.

  • Report this Comment On September 27, 2013, at 6:53 PM, stevsheppard wrote:

    Jaybones, itunes radio reviews are terrible, like the new os7, also so far as ive seen you can not use it with an android device, which despite the In any case its definitly not Scottish.

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