Dow Slides Along With and Pandora Media

Stocks fell broadly as shares of and Pandora Media plummeted following their earnings releases last night.

Apr 25, 2014 at 10:00PM

Earnings season had been going smoothly during the last two weeks as all three major indexes had made significant gains, but today, big names, including (NASDAQ:AMZN)sank following their quarterly reports, taking the market down with them. Rising tensions in Ukraine also weighed on equities as the U.S. prepared to add another round of sanctions against Russia. By the end of the session, the Dow Jones Industrial Average (DJINDICES:^DJI) finished down 140 points, or 0.9%, while the S&P 500 dropped 0.8%, and Nasdaq tumbled 1.8%. 

In today's economic news, the University of Michigan reported that consumer confidence hit its highest level since July 2013, rising to 84.1, up from 80 in March, and beating estimates at 82.6. The survey's reading of current economic conditions rose to 98.7, its best mark since July 2007. The report is just the latest piece of data indicating that the economy is returning to pre-recession levels of strength as it recovers from poor winter weather.

After gaining slightly in after-hours trading following its earnings release last night, shares finished today's session down 10% in an odd swing as analysts weighed in on the stock this morning. Many were frustrated by a continuing lack of meaningful profits, as well as the company's weak guidance for the current quarter, for which it sees an operating loss. At least a dozen analysts lowered their ratings or price targets, and the stock is now down more than 25% from its peak earlier this year, as it fell by about the same amount in its previous earnings report. Strangely, the company's report last night was typical for the retail giant with sales growing 23%, ahead of expectations, and EPS at $0.23. Amazon also continues to innovate, adding new features for customers such as HBO shows for its streaming catalog, and a grocery delivery service it's calling Prime Pantry. The rub with the online behemoth is its valuation and, with slowing growth and negligible profits, the price seems likely to return further within the earth's gravitational pull.


Also plummeting today was Pandora Media (NYSE:P), whose shares finished down 16.6% after its earnings report last night. Active listener growth slowed for the Internet DJ, increasing just 8%, to 75.3 million, short of expectations, and listener hours improved only 12%, to 4.8 billion. Despite the slow listenership growth, revenue surged ahead, climbing 54% to $180.1 million as the company has shifted from driving listener growth to monetizing its audience. That figure easily beat analyst estimates at $174.9 million, and its bottom-line performance also topped the experts' view by $0.01, coming in at a per-share loss of $0.13. Still, the stock got punished because Pandora's outlook for the current quarter was weak. The online radio service sees EPS of breakeven to $0.03 and revenue at $218 million against estimates of $0.05 per share and $219.3 million in sales. Pandora's full-year guidance was in line, but long-term profitability concerns seem valid with listener growth fading, and a forward P/E of more than 100.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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