Oakland, Calif.-based Pandora has more than 125 million users, and listener growth is doubling on an annual basis. Still, profits elude the company. Fears are growing Pandora may not be profitable for some time. The company competes in the paid radio market with Sirius XM (SIRI) and Spotify.
Pandora noted on a conference call Tuesday that mobile monetization would take place over the next 18 to 24 months, and analysts are worried about the company's ability to execute.
Citigroup analyst Mark Mahaney downgraded Pandora, adding to those fears, based mainly off the the company's inability to monetize mobile.Mahaney noted that a good portion of the long thesis is still intact but content costs are constantly rising, and Pandora's inability to generate revenue from its mobile platform (which Mahaney said is over 70% of usage) is a concern. He noted that fiscal year 2013 monetization will be flat, which "blows up the [Pandora] model." "The broad takeaway for purely ad-based Internet models (especially those that aren't lead-gen or Search based) may well be that the Mobile Transition will be rocky. For a 3-5 year VC timeframe, that's fine. For a 6-18 month Public Investor timeframe, that isn't. Hence, the downgrade...," Mahaney wrote in his note to clients. Mahaney cut the price target to $17 from $25, and downgraded shares to neutral from outperform.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV