What: Shares of Pandora Media (P) were down 10.1% as of 12:15 p.m. EST Monday after the music streaming specialist announced its CEO of two and a half years, Brian McAndrews, is leaving the company.
So what: Pandora didn't offer a reason for McAndrews' departure, but it is replacing him effective immediately with Pandora founder Tim Westergren, who insists he is "100% committed to Pandora's growth strategy [...]."
Pandora also expects to come in at the high end of its revenue and adjusted EBITDA guidance for the current quarter, and reaffirmed its full-year 2016 targets. For reference, Pandora's most recent guidance called for current-quarter revenue of $280 million to $290 million, and an adjusted EBITDA loss of $75 million to $65 million -- the latter of which will be incurred primarily as Pandora implements an aggressive plan to invest heavily in expanding its business from advertising and subscriptions to also include music transactions and commerce. For the full year, Pandora expects revenue of $1.40 billion to $1.42 billion, and an adjusted EBITDA loss of $80 million to $60 million.
Now what: As such, I'm not convinced investors should view this CEO turnover as a bad thing -- and in fact I generally prefer investing in founder-led businesses, anyway. Also to Pandora's credit, today's decline effectively brings Pandora stock back to where it stood a mere two trading days ago, before buyout rumors drove shares higher on Friday. In the end, as Pandora continues to show progress toward its long-term strategic initiatives, I think its buy thesis remains firmly intact.