Pandora (P) Stock Tumbles on Wider Loss Forecast
Shares of Pandora Media, Inc. (P: Charts, News) declined -1.70 or -18 percent to $7.75 per share in heavy after-hours trading on Tuesday, after the company warned its full year loss would be wider than previously forecast. Pandora cited the reason for the lower forecast was advertiser's concern over the looming fiscal cliff negotiations preventing them from making commitments in 2013.
The projected loss for the company's full fiscal year ending on January 31st, 2013 was revised to -$0.09 -$0.12 per share from a forecast made in August of a loss of -$0.04 - $0.08 cents per share. Sales for Pandora were also downwardly revised from $432 million to $422 -$425 million. Daily Chart
Oakland, California based Pandora Media, Inc. operates Pandora Internet Radio, an online music recommendation service available in the United States, with limited availability in Australia and New Zealand. Pandora had their Initial Public Offering in June of 2011 at a price of $16 per share, valuing the company at $2.6 billion. Pandora's media player is available for Apple (AAPL
) iPhone, iPad and iPod Touch through an App offered on the iTunes App store. The player is also available for Android and Blackberry phones, as well as for Windows Mobile devices and HP webOS. Pandora reported adjusted earnings for their fiscal third quarter of $0.05 per share, versus an analyst consensus of a penny per share. Revenue rose to $120 million, a 60 percent increase over the same period a year ago and also better than the expected $117 million. Despite the improved numbers, Pandora forecast a loss of between $0.06 and $0.09 per share for the fourth quarter, significantly worse than the expected profit of $0.01 per share analysts expected. The company cited the hiring of more local radio and ad sales personnel as a factor in its fourth quarter forecast, in addition to high music royalty expenses, which make up 55 percent of sales. In a phone interview after the earnings release, CEO Joe Kennedy stated that, "There are concerns about the effect the fiscal cliff will have on growth, and it's reduced our visibility," adding that "When our clients are cautious, we have to be cautious." While expressing caution about the fourth quarter, Kennedy also showed optimism for their mobile applications, "This quarter exceeded our expectations as we monetized mobile at record levels and grew total mobile revenue 112%. During the quarter we launched Pandora 4.0, the biggest redesign on the iOS and Android platforms ever, bringing new, innovative and enhanced functionality to mobile devices for the first time for both users and advertisers." While the company's fourth quarter outlook may seem weak, Pandora's popularity continues to grow. The company reported listener hours in November had risen 58 percent to 1.27 billion, while its active listener base had grown to 62.4 million, an increase of 45 percent. After the sell-off, which saw Pandora stock trade as low as $7.23 per share on Tuesday, the stock is now trading at less than half of its $16 per share IPO price. Other News About P Pandora Chairman and Chief Executive Officer to Host the BofAML Silicon Valley Internet Investor Tour
CEO Kennedy will host the event on December 6th
. Pandora Pushes Music Royalty Bill
Company presses for lowering rates on music royalties on Capitol Hill. Other Stocks in the News Facebook Will Replace Infosys in Nasdaq-100 Next Week
Facebook stock will be incorporated into the Nasdaq 100. Cerberus May Join Virtu Bid for Knight Capital
Cerberus may join Virtu in bidding for Knight against competitor Getco Holding Co. Copyright 2012 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.
Published on Dec 5, 2012
By Jay Hawk