Why Pandora Media, Inc. Stock Got Tuned Out Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were hitting the mute button today on Pandora Media  (NYSE: P  ) stock today, which was down as much as 14% after its second-quarter earnings report came out last night.  

So what: The headline numbers were actually solid as the Internet radio provider saw revenue grow 38% to $218.9 million, in line with estimates, while adjusted EPS was even with a year ago at $0.04, but beat estimates by a penny. Still, investors seemed concerned by sequentially slowing subscriber growth and listenership as June listener hours per day were down from 55.8 million in May to 53.7 million. The company attributed the slide to seasonality as the summer months may bring users away from listening devices, but Pandora also lost share of U.S. radio listening going from 9.13% to 8.9%.

Now what: The online DJ has been a mystery to Wall Street ever since its IPO back in 2011. The stock has been highly volatile falling as low as $7 and climbing as high as $40 even though its results have been steady all along as it consistently posts strong revenue growth and near breakeven profits. The music space is a fast-changing one, and Pandora faces a number of the threats, but the company's advertising growth is surging in key areas as mobile ad revenue jumped 51% and local ad dollars increased climbed 144%. The music service even raised its full-year EPS guidance from $0.14-$0.18 to $0.16-$0.19, a move that's usually met with cheers from Wall Street. I'd blame today's slide on Pandora's sky-high valuation, which was perhaps deserving of a correction, rather than anything unseemly in the report.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest...better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.

 


Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 25, 2014, at 3:24 PM, propert wrote:

    Yahoo's launchcast was better, and it floundered. Not sure why pandora is considred the end all be all of music. Yes, their library is bigger, but aren;t people satisfied with the free music offerings they find on musicstream and their own personal playlists? too much competing stuff out there, like spotify and itunes radio for example.

  • Report this Comment On July 25, 2014, at 7:20 PM, MayTepper wrote:

    William Blair Maintains Outperform On Pandora Media Following 2Q14 Results http://bit.ly/1phmAjP

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3045035, ~/Articles/ArticleHandler.aspx, 10/23/2014 2:03:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement