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Why Pandora Media, Inc. Stock Fell 32% in November

By Anders Bylund - Dec 6, 2017 at 3:11PM

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The streaming music service plunged on a mixed quarterly report with a side of deeply disappointing guidance.

What happened

Shares of Pandora Media (P) fell 31.6% in November, according to data from S&P Global Market Intelligence, toppled by another uninspiring earnings report.

So what

In the first week of November, Pandora reported third-quarter results. Adjusted earnings clocked in at a $0.06 net loss per diluted share, and revenue increased 8% year over year to land at $379 million. Analysts had been looking for a somewhat deeper net loss on sales in the neighborhood of $381 million.

But it wasn't the mixed results that drove Pandora's share prices as much as 27% lower the next day. It was yet another gloomy revenue forecast for the next quarter.

A sad woman wearing headphones, seen through a rain-washed car window.

Image source: Getty Images.

Now what

For the fourth quarter, Pandora expects to record top-line sales of roughly $373 million. That would work out to just 3.3% of organic year-over-year growth, and the analyst consensus at the time stood at $413 million.

Frankly, Pandora's business model is falling apart. The streaming music platform is battling rising content costs while ad revenues and premium subscription fees are posting weak growth. Recently appointed CEO Roger Lynch faces an uphill battle on multiple fronts. I say this as a Pandora shareholder and a longtime fan of the actual service. At this point, I'm looking for a way out of this unfortunate investment that doesn't lock in a massive loss.

Judging by the market's reaction to Pandora's third-quarter results, I'm not alone.

Anders Bylund owns shares of Pandora Media. The Motley Fool owns shares of and recommends Pandora Media. The Motley Fool has a disclosure policy.

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