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   Technology StocksPandora


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From: Lahcim Leinad6/17/2011 9:50:08 AM
   of 44
 
BTIG Says Sell, $5.50 Target

By Tiernan Ray

Richard Greenfield with BTIG Research today initiated coverage of Pandora Media (P), owner of the Pandora Internet Radio service, with a Sell rating and a $5.50 price target, implying downside of about two thirds from a recent price of $15.22.

Pandora stock is down about 13% today after a 9% first-day bounce yesterday.

“Pandora has been the “survivor” in Internet radio,” writes Greenfield, “but we believe digital music will have a wider array of competitors over the coming year.” Greenfield counts among those competitors Spotify and Turntable.fm.

Revenue‘s going to rise dramatically, he writes, from $264 million to $1.1 billion by 2015, as registered users soar from perhaps 82 million to 193 million.

But it will lose money on a net basis this year through 2013, before turning in positive EPS in 2014, and perhaps just $15 million in Ebitda in 2014 and $81 million in Ebitda by 2015.

Pandora’s business model includes music-licensing fees that are fixed, but that also rise each year. As more and more use of the service goes mobile, and away for the desktop, the company is facing lower CPMs for advertising, because audio-only ads are not as high a rate as the display ads the company can get on the desktop, he writes.

The business doesn’t scale, in his view:

While Pandora is creating a large active user base, its reach/frequency continues to pale in comparison to terrestrial radio, as does its profitability. Pandora’s fundamental problem is that active users and listening hours are growing rapidly, but those listener hours have fixed (and annually escalating) royalty costs per streaming hour (fees to music labels).

Greenfield’s $5.50 target is based on a multiple of 11.3 times 2015 Ebitda, or 17 times free cash flow that year. By contrast, investors betting P can rise to $21 in coming years are valuing the stock at 49 times that 2015 figure, which he thinks is excessive.

Pandora shares today closed down $4.16, or 24%, at $13.26. The shares went on to fall another 5% in late trading, to $12.65.

blogs.barrons.com

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To: Lahcim Leinad who wrote (11)7/2/2011 7:10:28 PM
From: engineer
1 Recommendation   of 44
 
what kind of bait and switch management is this?

they start out wtih a great concept and have the user paid by ads. They get lots of subscribers, now they do everything in their power to mess with the people who gave them their IPO valuations.

How can a REALISTIC CEO put forth an IPO based on a money losing business plan? they lose money on people who enjoy the music too much, so they send out threatening emails and shut down the service every 5 minutes just to "entice" you to buy their service for $39.

At FREE they were a play, at $39 a year and all this drama, they are now irrelevant. We will have to wait for the next startup to come along who CAN operate it on ad revenue and users clicks. There is a reason that Yahoo went down in flames and Google is a cash machine.....they were SECOND to market.

How can you post anything about EBDTA? They are in a loss position now and destined to remain there for awhile unless they trap enough users into paying them, but what do the users get if they have to shut down due to large losses at the end of 6 months?

the algorithm they had was great, their business model was a mess. Too many of these social networking and web based IPOS are flying out the door without anyone doing REAL due diligence. 1999 dot.com boom again?

Are we really back to the stupid investor with the greater fool theory now to sell off after the IPO?

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To: engineer who wrote (12)7/3/2011 1:35:08 AM
From: Lahcim Leinad
1 Recommendation   of 44
 
Are we really back to the stupid investor with the greater fool theory now to sell off after the IPO?

Yes.

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From: Lahcim Leinad7/19/2011 4:23:39 AM
   of 44
 
The company’s stock closed at $16.95 down 83 cents (4.67 percent) from the last closing of $17.83. On its first day of trading on June 15, Pandora had closed at $17.79 a share, or nine percent higher than its $16 starting price.

Its market cap has also slipped, from $2.78 billion on that first day to $2.71 billion today.

Why all the drops? A little just-launched music service called Spotify. Music subscription sites are a dime a dozen these days, but Spotify had already acquired solid traction outside the U.S., and with that traction it had built up a lot of hype. When it finally launched stateside last week, the sleeping beast of hype awoke, worrying Pandora stakeholders that their little gem of a music service might not be able to weather the storm.

As Amazon, Google and Apple roll out their cloud music services, Pandora’s stock could become shakier.

Excerpt from: vator.tv

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From: JakeStraw7/25/2011 2:46:36 PM
   of 44
 
  • Pandora Media (NYSE: P) is now covered by analysts at Stifel Nicolaus. The analysts set a "hold" rating and a $18.00 price target on the stock.
  • Pandora Media (NYSE: P) is now covered by analysts at Wells Fargo & Co.. The analysts set an "outperform" rating on the stock.
  • Pandora Media (NYSE: P) is now covered by analysts at JPMorgan Chase & Co.. The analysts set an "overweight" rating and a $22.00 price target on the stock.
  • Pandora Media (NYSE: P) is now covered by analysts at Citigroup. The analysts set a "buy" rating and a $25.00 price target on the stock.
  • Pandora Media (NYSE: P) is now covered by analysts at Morgan Stanley. The analysts set an "equal weight" rating on the stock.
  • Pandora Media (NYSE: P) is now covered by analysts at William Blair. The analysts set an "outperform" rating on the stock.

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From: Lahcim Leinad8/31/2011 2:29:31 PM
   of 44
 
Pandora Slides; Report Facebook To Launch Music Service - Forbes

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From: Glenn Petersen9/2/2011 1:49:55 PM
   of 44
 
Pandora Should Be At $4

by: Kraken
Seeking Alpha
September 2, 2011

Pandora Media, Inc. ( P) operates as an Internet radio company in the United States. It provides its radio service to traditional computers, Android phones, Blackberry phones, and the iPhone. The company allows listeners to seed personalized stations with artists, composers, songs, and genres or choose stations organized by genre, as well as enables listeners to create up to 100 personalized stations and use combination feature to listen to two or more of their stations at one time.

Pandora has a very simple business model. It allows people to listen to music for free. The company generates revenue from ads on the stations and uses the proceeds to pay royalties and help keep their radio stations up. Sounds like a great business model except for the fact that the company has had a daunting task of turning a profit.

Currently the stock trades around $12 per share. This is a very high valuation for a company that can't hold a profit. So why such a high valuation? Well the market believes that there is significant growth opportunity ahead and a consensus of analysts are expecting 45% growth.

Simply put even if Pandora's consumers grow 45% annually, the company will still lose money. This is because the way the company is set up. Expenses are always higher than revenue.



Source: radioink.com

Pandora reported earnings last week. The company reported a 117% increase in revenue growth. Sounds like the company is doing solid except for the part where its cost rose 130%. The content acquisition costs rose the most as the company is trying to stay competitive against companies such as Sirius XM ( SIRI) and Spotify.

The other concern that I have is the employee stock option plan. The plan is extremely dilutive and considering this company basically has no net income, the company is hurting itself.

My $4 price target is actually still a bullish prediction and let me explain why. Let's say that the company starts generating positive net income around 15 cents a share annually, which would be a significant improvement and a difficult task to achieve to achieve for them. Even at $4 a share and with an annual net of $24.15 million(15 cents per share). The P/E ratio would be around 26.6. Keep in mind the company lost $1.8 million just in the last quarter alone.

At the current valuation of $2 billion with a P/E ratio of 25(higher than the average S&P 500 average) the company would need to make $80 million a year. The fact that the market keeps giving it such a valuation is such a surprise. A large amount of speculation and a lack of knowledge has caused the stock price to maintain this valuation. Long-term this stock has nowhere to go, but down.

If you want exposure to the music industry there are much better companies out there that are turning a profit. Here is a few:

Sirius XM is on the verge of a turnaround and is already generating nice profit. The company has strategic partnerships with auto manufacturers such as Ford ( F). Ford has been offering several Sirius promotions and has included the radio system in most of their lines. While Ford is also enjoying strong sales, Sirius will gain from that as well. Sirius trades at a forward P/E of 22.

Cumulus Media ( CMLS) is another stock in the radio space. The company operates almost 350 radio stations in mid to large size markets. The company has been generating millions in free cash flow.

Of course if you are really willing to take some risk, then you could go short Pandora. I am very confident long-term the stock price will have to fall to match the fundamentals. If you are going short, just be careful as the sheer amount of speculation can still drive this up. The market can remain irrational for a very long time.

The sad thing is that CEO even knows the company will probably not be profitable. I encourage you to watch his interview here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

seekingalpha.com

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From: Lahcim Leinad10/11/2011 11:45:45 AM
   of 44
 
Pandora Learns The Hard Way, Mobile Ads Are Still Far From Being A Cash Cow | paidContent

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From: kaching!3/6/2012 6:26:25 PM
3 Recommendations   of 44
 
Today's results confirm what many have suspected:

This is a stock with growth in poor revenue generating areas, problematic expansion potential, combined with an inability to control costs.

With regard to mobility, Pandora touts lots of metrics about increasing mobile growth, but only earns one-third as much off mobile as it does off of desktop (although it likes to frame this as an "opportunity"). Meanwhile costs per song played are the same regardless of whether it is mobile or desktop. For those in the USA, you may not be aware that Pandora is not available everywhere else e.g. Canada due to an inability to come to licensing terms for songs. According to it's own documents, in the U.S. Pandora has projected increasing costs on a yearly basis as the amount it will have to pay for each song played will increase by a penny per year e.g. 11 cents to 12 cents, then 13 cents, 14 cents, and 15 cents. These would be substantial cost increases for any company with substantial revenue growth , but are basically unsustainable for this company.

Looking at insider activity, it not that hard to discern what insiders think of the company prospects (sell). One can argue that some are just taking advantage of awarded options, however, the anemic number of insider buys speaks volumes.

The 50% miss in earnings (-3 cents vs. -2 cents) is based on revised downward projections from last year. This does not bode well, and I think investors would be well advised to be wary of all the bullish analyst projections.




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From: kaching!3/19/2012 5:47:37 PM
   of 44
 
Royalties Cost Pandora Big Bucks


Thanks to Jack Messmer for this article.


http://rbr.com/royalties-cost-pandora-big-bucks/

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