Pandora Chickens Out

If you have nothing nice to say, don't say anything at all. 

Pandora (NYSE: P  ) disappointed investors with uninspiring performance metrics for the month of February, but the real dagger is that the leading streaming service will be discontinuing its practice of providing key audience metrics on a monthly basis. 

Yes, February itself was pretty bad. Listener hours were 1.51 billion, below the 1.58 billion hours of content it served up in January. Now, it's true that February is a shorter month. Usage may still have gone up sequentially in 2012, but last year we saw the collective time spent consuming Pandora go from 1.39 billion in January to 1.38 billion in February.  

However, the market isn't impressed even if we approach things on a year-over-year basis. Pandora's listener hours only increased 9% since the equally brief February of last year. Growth is decelerating at Pandora. The year-over-year growth in listener hours for the month has gone from 101% two years ago to 42% last year to the single digits now.

Apple's launch of iTunes Radio in September of last year could be making a difference here. Apple's platform is limited in its reach and still in its infancy, but it was likely a key contributor in Pandora posting a sequential slide in unique listeners for the month of October. It did bounce back the following month, but clearly something isn't right if Pandora's abandoning the monthly disclosure of its listener hours, active listeners, and its share of the total U.S. radio listening market. 

We've seen another market darling do this. Netflix discontinued its practice of publishing its churn rate three years ago. It told investors and the SEC that the metric was no longer relevant as streaming was making up a larger part of its platform than DVD rentals, and it was just too easy for streaming accounts to stop and start again between lulls to save money.

Pull up a chart on Netflix since the summer of 2011 through now and you will see the wild volatility that leaving investors in the dark created. Netflix shares initially plunged before eventually overtaking their 2011 all-time highs. This doesn't mean that Pandora investors should buckle up for a similar roller-coaster ride. The company still plans to reveal these metrics on a quarterly basis, unlike Netflix, which won't discuss churn at all anymore. However, it's safe to say that Pandora shares will be more volatile whenever it posts quarterly results since we won't know about usage beforehand. It will all be new at the time, and not just merely the final reveal of how it was able to successfully monetize the traffic we knew it had generated in the three previous months.

The last of the monthly metrics will be put out early in June for the month of May. If year-over-year growth continues to meander in the single digits and possibly even continue to decelerate, we'll know why silence became golden at Pandora. It's a pity. Pandora was one of the more forthcoming growth stocks out there.

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  • Report this Comment On March 11, 2014, at 6:11 PM, PhilAngeleno wrote:

    the only reason that P is no longer releasing monthly metrics is because the 3rd party metrics from Triton Digital are now accredited... and those are the numbers the advertising industry uses to buy media on Pandora. numbers will still be available monthly via Triton and P will still be offering their own #'s on a quarterly basis.

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