Pandora's Box May Never Be Able to Make Money

Wells Fargo analyst Jason Maynard also cut his estimates on Pandora and pushed monetization further out, but didn't downgrade the shares.

"The transition from desktop to mobile is going well, perhaps too well, as monetization is lagging the huge growth in listener hours and CAC. Mobile listening accounts for over 70% of total hours, and unfortunately still has low CPM's relative to the desktop web," Maynard wrote in his note. He lowered his earnings estimates for 2013 to a loss of 16 cents a share, down from a loss of 1 cent. He did raise his revenue estimate to $410 million from $405 million. He cut his price target to $15-$18 from $21-$23 and kept his outperform rating.

The Internet radio company reported a loss of 3 cents a share on revenue of $81.3 million for the three months ended in January. Analysts polled by Thomson Reuters were looking for a loss of 2 cents a share on revenue of $83.1 million.

In addition to the earnings miss, Pandora provided weaker-than-expected first-quarter guidance, which analysts are attributing to weak advertising sales. Pandora said it expects first-quarter revenue to be between $72 million and $75 million. Analysts had been expecting first-quarter revenue of about $86 million.

Pandora shares were sharply lwoer in Wednesday trading, down 24.9% to $10.72.

Interested in more on Pandora? See TheStreet Ratings' report card for this stock.

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--Written by Chris Ciaccia in New York

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