In the following video, Jeremy Bowman shares his insights with Isaac Pino regarding why investors should buy Pandora.
First, Pandora represents a disruptive innovation with great growth potential in smartphone and automotive devices. Pandora also helps listeners find new music they may like, not unlike a Google search algorithm. After seeing its stock rise after its IPO, Pandora has now dropped to a more attractive price.
Second, the Internet Radio Fairness Act, if passed, should improve Pandora's profit margins. Currently, Sirius XM Radio pays royalties of about 8%, while Pandora pays about twice that amount. Passage of the bill will lower Pandora's rate and help the company compete with Sirius and other Internet radio services.
Third, Pandora has yet to establish itself in the international market. While it has just begun in Australia and New Zealand, other markets, notably Europe, remain untouched. If it can grow, Pandora potentially could allow members to access their favorite music anywhere in the world using common consumer or automotive products.
