Shares of Pandora (P) have been trending lower since buyout dreams were dashed in light of Sirius XM Radio (SIRI -0.72%) investing $480 million in the meandering online music platform, but they roared to life on Wednesday with a 7% pop.

Pandora stock moved higher after John Tinker at Gabelli initiated coverage of the former dot-com darling with a bullish buy rating. He is also setting a $12 price target, that even after Wednesday's move still represents a hearty 60% of upside. It's a move that could be opportunistic. Shares of Pandora hit a fresh all-time low on Monday. However, with its fundamentals showing signs of slipping and an outright acquisition seemingly off the table now that Sirius XM has settled for a small stake in Pandora instead of buying it, it remains to be seen if the stock will continue to bounce off this week's fresh lows. 

Pandora app on a car dashboard.

Image source: Pandora.

Panned aura

Gabelli's bullish market call is as refreshing as it is unexpected. Wall Street pros weren't as upbeat on Pandora last week, sending the stock 18% lower. Oppenheimer downgraded the stock. FBR Capital upgraded the shares, but also accompanied that call by lowering its price target from $14 to $11.

Pandora's in a rough place. Its most recent quarter was disappointing. Revenue climbed just 6%, the first time that its year-over-year top-line results failed to grow by at least double digits. Ad revenue increased a mere 1%. Subscription revenue is on the rise, up 20%, but the 4.71 million subscribers it had at the end of March is just 6% of its shrinking active listener base.

There are still some nice things to be said about Pandora. Its 76.7 million active listeners may be lower than the 79.4 million accounts it was entertaining a year earlier, but it's still a sizable audience. It's also still too early to see how its long overdue push into on-demand streaming will fare, but most of the initial subscriptions are coming from Pandora's existing user base so the premium membership acquisitions have come on the cheap.

We also shouldn't dismiss the appeal of Sirius XM as an investor. Sirius XM could help improve Pandora's advertising efforts and its drive for more premium subscribers if it takes an active interest in growing the value of its investment. Sirius XM's $480 million infusion -- along with Pandora's $200 million sale of Ticketfly -- also arms it with enough cash to stop worrying about near-term liquidity issues. Gabelli's Tinker may seem to be running into a burning building, but at a time when the market is dumping a stock that a premium radio giant is now incentivized to see succeed, it may be the right direction to take.