Why Barnes & Noble and Pandora Media Fell

Stocks finished mostly even today, but Barnes & Noble and Pandora took a spill.

Apr 3, 2014 at 10:02PM

Stocks edged down today as investors paused before tomorrow's jobs report, with major indexes having hit record highs this week. The Dow Jones Industrial Average (DJINDICES:^DJI) finished essentially unchanged, falling 0.45 points, while the S&P 500 slipped 0.1% and the Nasdaq tumbled 0.9% on another momentum-stock sell-off that included big names in social media and biotech. 

The day's economic reports were mostly weaker than expected. Initial unemployment claims last week rose slightly from 310,000 to 326,000, exceeding estimates at 320,000. Still, that figure was relatively low, and bodes well for tomorrow's employment report. The four-week moving average, sometimes seen as a better indicator of the direction of the labor market, held at just below 320,000, close to post-recession lows. Elsewhere, the trade deficit expanded to $42.3 billion in February from $39.3 billion in January, and above estimates of the same amount. Total exports fell 1.1%, hitting a five-month low and confirming fears of an economic slowdown during the winter and likely foreshadowing slower first-quarter GDP growth than expected. Finally, the ISM March Services index came in at 53.1, slightly below predictions at 53.5, but above February's mark at 51.6, and the employment index returned to positive territory.  

Source: Flicker.com

Barnes & Noble (NYSE:BKS) shares plummeted 14% today after Liberty Media (NASDAQ:LMCA) said it was dumping 90% of the preferred stock it holds in the bookseller. In 2011, the media conglomerate had invested $204 million in Barnes & Noble for a stake equivalent to 17% of the company, largely on the strength of the Nook e-reader. The Nook has since faded in popularity and put up continued operational losses for the retailer, making today's sale further confirmation of the unlikelihood of the Nook or its parent company making a turnaround. Barnes & Noble will also lose Liberty CEO Greg Maffei from its board as a result of the sale. 

Pandora Media (NYSE:P) also had rough day as the stock jumped out to a 7% gain this morning, but finished down 5% as investors struggled to interpret the company's latest audience metrics report. The Internet radio provider said listener hours rose 14%, to 1.71 billion from 1.49 billion, while active listeners increased 8%, to 75.3 million. Still, the active user count was flat from the previous month, and the company's slowing growth may be of concern because the stock carries a high price tag and is only borderline profitable. As growth flattens, Pandora's ability to monetize its listener base will become more important than its audience metrics. With 38% revenue growth expected this year, the company seems to be successfully converting users into dollars, and is seeing adjusted profits. Still, competitors abound in the industry, and shares have already been bid up significantly, more than doubling from a year ago. In the last month, though, they have fallen 25%.  

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Pandora Media. The Motley Fool owns shares of Barnes & Noble, Liberty Media, and Pandora Media. 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 Motley Fool has a disclosure policy.

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