After a spectacular IPO in early June, Pandora Media
As it turns out, the report wasn't the horror story investors were expecting. The stock jumped as much as 13% in after-hours action and settled on a still-respectable 8% gain in late-Friday trading. That $13.50 level represents an 11% swoon in August … but then the S&P 500 has lost 9% of its value, too. Fellow recent IPO LinkedIn
Pandora's numbers look decent. Revenue jumped 117% year over year to $67 million, with 87% of sales coming from advertising and the rest from subscription services. Part of Pandora's allure lies in the low-cost access to millions of music tracks, so I don't expect this equation to move very far in the direction of subscription revenues. I'd love to see the company prove me wrong, however -- Netflix and Sirius would be a fraction of their profitable selves under an ad-supported business model.
For now, a better revenue model may not be strictly necessary. Pandora reported a non-GAAP net profit of $0.02 per share, ahead of the Street's breakeven projection, and even generated a modest $0.5 million in operating cash flows.
I find the early numbers intriguing, but am not ready to plunk down real money on this stock yet. Pandora remains firmly seated on my watchlist for now, and it only takes a click to put it on yours as well. If and when Pandora broadens its revenue sources, gets into car stereos in a big way, or utterly fails to do any of the above, informed investors like you and I will be ready to pounce.
- Add Pandora Media to My Watchlist.
Fool contributor Anders Bylund owns shares of Google and Netflix but holds no other position in any of the companies discussed here. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google and Netflix, as well as buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio, follow him on Twitter or Google+, or peruse our Foolish disclosure policy.