Back to top

Analyst Blog

Despite significant competiton, Pandora (P - Snapshot Report) continued to solidify its position in the U.S. web-based radio market in October. Pandora recently announced that listening hours jumped 18.0% from the year-ago month to 1.47 billion in Oct 2013.

Additionally, Pandora’s share of the total U.S. radio listening market surged to 8.10% compared to 6.60% in the year-ago month and 7.8% in Sep, 2013.

We believe that the rise in listening hours may have resulted from Pandora’s change of policy related to listening limits. In September, the company cancelled the listening limits (40 hours per month) that it had imposed on free users. As a result, listening hours nearly matched the 1.49 billion listener hours it had reported in March, prior to the setting up of the ban. Listening hours also improved from 1.36 billion reported in September.

Pandora exited the month with almost 70.9 million active listeners, in comparison to 59.2 million listeners a year ago. However, the number of active listeners declined over the month from 72.7 million in Sep, 2013.

We believe that the slowdown resulted from the recent launch of Apple’s (AAPL - Analyst Report) iRadio service. As more and more people try iTunes Radio, we believe that Pandora will lose some market share going forward.

However, we note that Pandora enjoys a first mover advantage in the music streaming industry. We believe that Pandora’s already popular service, driven by its effective discovery engine and well established infrastructure places it well to compete against the likes of Apple, Spotify, Google and Sirius XM (SIRI - Analyst Report).

Additionally, Pandora had raised some $400.0 million from stock offering in September. The company expects to use a portion of the proceeds for international expansion. The company will also open new sales offices and compete with radio stations for attracting local advertising, which is a significant opportunity going forward.

Nevertheless, we believe that rising costs related to licensing and intense competition are the major headwinds in the near term.

Currently, Pandora has a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%