What happened

Pandora Media inc. (NYSE:P) stock climbed 37.1% in August, according to data from S&P Global Market Intelligence, driven by the streaming music leader's better-than-expected second-quarter 2018 results and subsequent encouraging analyst commentary.

Shares surged almost 15% on Aug. 1, 2018, alone -- all but recouping a nearly 15% drop in late July -- after Pandora announced its quarterly revenue had climbed a modest 2.1% year over year to $384.8 million, translating to an adjusted net loss of $38.9 million, or $0.15 per share. By comparison, Pandora's guidance called for revenue in the range of $360 million to $375 million, and consensus estimates on Wall Street had predicted a wider $0.16-per-share loss.

Pandora Media logo in a mural with colorful artwork and various artists performing

IMAGE SOURCE: PANDORA MEDIA.

So what

To be clear, Pandora's revenue last quarter would have climbed 12% had it not been for the company's decision to divest Ticketfly and wind down its Australia/New Zealand operations. The company credited the strength of its Pandora Plus and Pandora Premium platforms, where paying subscribers grew 23% year over year to 6 million and drove a 67% increase in subscription revenue, to $113.7 million. That growth more than offset a 2.6% decline in advertising revenue, to $278.2 million, driven by a 2.5% drop in total listener hours.

For those concerned about Pandora's advertising weakness and falling listeners, management assured investors that the company is still in the earliest stages of a long-term turnaround. CEO Roger Lynch teased that recent new partnerships with brands including Snap and AT&T, combined with enhancements in its advertising technology, should help Pandora accelerate growth in the coming quarters.

Sure enough, on Aug. 28, 2018, Pandora followed by announcing several new audio advertising capabilities aimed at increasing ad personalization for clients.

Now what

Perhaps unsurprisingly, Pandora shares surged shortly thereafter when analysts at Raymond James reaffirmed their "strong buy" rating on the stock, citing its new capabilities as a signal that "execution is improving and the advertising recovery is on track."

As it stands, Pandora stock has climbed nearly 90% so far in 2018, but still sits up just 8% from this time one year ago. If the company can indeed keep its momentum and continue accelerating growth from here, last month's gains could be only the beginning.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Pandora Media. The Motley Fool has a disclosure policy.