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Has Pandora Beaten Apple and Sirius XM for Good?

Dan Caplinger
November 19, 2013

Pandora Media (NYSE: P) will release its quarterly report on Thursday, and investors are convinced that the music streaming company will continue to enjoy lightning-fast growth rates well into the future. Even as Apple (NASDAQ: AAPL) and its iTunes Radio join Sirius XM (NASDAQ: SIRI) and other competitors in the Internet music space, Pandora continues to defy skeptics who seemed convinced that the company's days were numbered.

For more than a year after its 2011 IPO, Pandora convinced cynical investors that it had gone public at exactly the right time, as its shares slowly ground downward to lose half their value. Through quarter after quarter of unprofitable results, many believed that existing offerings from Sirius XM and the long-anticipated competition of Apple would eventually pound Pandora into the ground before it became profitable even on an adjusted basis. Yet now, Pandora seems poised to fend off competitors Apple and Sirius and continue on its upward path. Let's take an early look at what's been happening with Pandora Media over the past quarter and what we're likely to see in its report.

Stats on Pandora Media

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$174.76 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Pandora keep coming in loud and clear?
In recent months, analysts have reined in their views on Pandora earnings, cutting their October-quarter estimates by $0.02 per share and their full-year fiscal 2015 projections by more than 20%. The stock, though, has just kept vaulting higher, rising 46% since mid-August.

Pandora came into the current quarter on a negative note, with shares plunging after its July-quarter earnings report. Even though revenue grew 58% on an adjusted basis, earnings topped expectations. But dour guidance for the October quarter made investors question whether Pandora would be able to answer the competitive call and keep growing fast enough to justify its valuation.

But the big moment for Pandora during the quarter was the release of Apple's iTunes Radio, which Pandora shareholders had dreaded for more than a year. Given the extent of the iTunes library and Apple's lower price point for commercial-free listening, Pandora investors have to be concerned that despite its huge first-mover advantage in gathering tens of millions of users, it could quickly lose its edge. Yet initial indications suggest that users like Pand