3-8-2012
You just never know when the market will turn on you after propping you up, flirting with you and loving you for months on end. Yesterday while the Dow was up 78 points, investors were punishing the Pandora stock, ripping away its value for a second day in a row sending it face first toward its 52-week low of $9.15.
Pandora will open this morning at $10.86. This young and loved company was once a $26.00 stock, not too long ago. It may be a sign that investors want to see revenue and profit generation a lot sooner than they were willing to wait with previous Internet darlings. Or, it just may be that Pandora has signaled a slow start to 2012 and investors are going to wait it out until Q2. As CEO Joe Kennedy touts record listening hours, active users and billions of thumbs up, investors are letting him know they want him to show them the money.
KENNEDY SAYS PANDORA WILL BE LARGER THAN MOST RADIO STATIONS
In three months ended January 31st, Pandora reported a 62% increase in active users, a 71% increase in advertising revenue and nearly doubled listening hours. But everyone knows, as those numbers increase, so do the royalties Pandora has to pay out. Content-acquisition costs more than doubled, to $48.2 million in the quarter, from $23.9 million a year earlier. And, while Kennedy says the local sales effort is ramping up, it may be this line that didn't sit so well with investors: "meaningful revenue from the local radio markets is 18-24 months away." Kennedy said Pandora is finishing the "initial process of staffing local radio ad sales teams in most top ten U.S. markets."
KENNEDY SAYS "WE CONTINUE TO DISRUPT THE RADIO INDUSTRY
Another possible factoid that caused investors to head for the exit sign this week was the Q1 guidance. While generating $81 Million in revenue in the most recent quarter, the company predicted revenue between $72 and $75 million in its next quarter. And while the company has taken a position that it is redefining radio, in 2011 the Radio Advertising Bureau reported radio revenue totaled $17.4 Billion, a slight increase over 2010. Over the past year, Pandora generated $274 Million in revenue and not all of that comes from audio advertisers, some of it is user fee revenue.
(3/8/2012 9:44:21 AM)
The problem with Pandora dealing with automakers is they assume everyone has a high speed, always on, unlimited bandwidth data connection. Newsflash - they don't. And audio streams chew up data plans really fast. Satellite's advantage is huge - all you need is that little stick-on antenna if you don't already have it built in to your car stereo. I don't see Pandora on the road gaining much traction.
(3/8/2012 9:25:13 AM)
I'm REALLY getting tired of Radio and our trade magazine partners getting all defensive over Pandora! Stop giving them a podium to pound their puny little chest! If Chicken Little had gotten as much credence as Pandora, we'd be calling the earth "sky!" It's not NEWS when Pandora trumps up a ratings metric like "starts." I suspect the NEWS we will never hear is "Pandora reports a profit!"
(3/8/2012 7:27:06 AM)
Guys...thank you for the feedback.
There are several reasons we cover Pandora.
#1) One of their stated objectives is to take revenue from radio. We simply cannot ignore that.
#2) They are a real audio company that consumers love.
#3) We always cover new technology.
Thanks again
Ed
I'm not sure I agree with you, Jock. If Pandora didn't ask for such a large minimum investment, I'd be sending them avails along with everyone else. The metrics they use are different, but I can work that out. Time will tell...
- Jen White, White House Media(3/8/2012 6:31:59 AM)
Why are you so obsessed with Pandora?
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