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Bearish Because of Bieber? A Flawed Take on Pandora

NEW YORK ( TheStreet) -- On Wednesday, Spotify announced it will launch service in Canada. I waited for the obligatory "cautious mention" of Pandora (P - Get Report) from BTIG Media's Richard Greenfield, but, as far as I know, it never came. Maybe Greenfield just decided to stop embarrassing himself.

Even though I disagree, I have no problem with Greenfield sharing his bearish takes on Pandora. I do, however, take exception to what seems like a vendetta against the company and the asinine notes, which my feed refers to as cautious mentions, Greenfield releases to support his position.

Boys Who Cry Wolf

Broadly speaking, Greenfield situates practically any piece of news from the Internet radio space as a significant encroachment on Pandora's dominance in the area.

Case in point: Back in June, Greenfield not only touted Songza, he warned that Pandora investors "should be concerned" because the new (and impressive) streaming music service's app exploded to the top of the iOS charts. Indeed, Songza did spend considerable time at No. 2, roughly 20 spots ahead of Pandora. I blasted Greenfield for acting like it mattered.

Two months after Greenfield's misinterpretation of app data as research, I'm proven right.

As Apple's (AAPL) iTunes Free Apps chart shows, Pandora now ranks 30th; Songza no longer shows up on the list.

Greenfield clearly does not understand how Apple ranks apps. You can explode to the top of the charts. It's quite a bit more difficult to stay there. Plus, the standings change daily. As I wrote this, among Internet radio apps, Spotify was No. 20, Pandora was No. 30 and iHeart Radio was No. 60. By now, those numbers might have shifted.

Unfortunately being wrong doesn't stop the inanity. And, let me be clear, I am not talking about being wrong about a stock or even a company's outlook. I was right there with Greenfield for the fall of Zynga (ZNGA).

Bieber Beliebes in Songza

I received an email with a Greenfield note from Aug. 8. He actually had the nerve to refer to "the blog we wrote" earlier in the year on "new Pandora competitor" Songza, as if it still contains even a shred of credibility. He then directed his audience -- and dear God, I hope they're not paying clients -- to the Twitter account of Justin Bieber:
so @alfredoflores just showed me @songza for workout playlists. Why didn't any of my 26million best friends show me this? #whichplaylist

I'm as much of a Belieber as his other 26 million followers, but, please, for Greenfield to direct people who are, presumably, investors to that tweet and then the subsequent positive reaction from Bieber's fans represents a new low in the industry. To top it off, he even presents unscientific research poorly. Maybe Bieber's 26 million friends didn't show him that because they don't use Songza?

In any event, Greenfield lacks a comprehensive understanding of Pandora's business model and its strategic-competitive position in the new media space. Because of this, he resorts to simplistic, surface-scratch tactics to build what amounts to a non-case. And, from time to time, when Briefing gives him the time of day or CNBC puts him on TV, he moves Pandora's stock. That's bad for Wall Street and it's bad for investors.

At the time of publication, the author was long P and ZNGA.

Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.

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