This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Buy Pandora, Sell Zynga and Fire Its CEO

NEW YORK ( TheStreet) -- I have a soft spot for socially awkward San Francisco entrepreneurs. I figured at some point that weakness would burn me.

Now, on the rebound, I'm done giving Zynga (ZNGA - Get Report) CEO Mark Pincus the benefit of the doubt.

Pincus sold the company's stock in a $12 per share secondary offering. Weeks later Zynga reported a pathetic quarter. Longs got fleeced. Pincus charged the shaver.

As employees from every rank jump ship at Zynga, the ones with the privilege of quitting to Pincus' face likely tell him, It's not me, it's you.

Investors who dumped the stock do not misunderstand Zynga. And folks who are furious with Pincus have a right to be. Whether he broke the law or not is irrelevant, however one thing's certain. On just about every level, Pincus goes down as 2012's most incompetent CEO.

Contrast the unacceptable scene at Zynga with the situation at Pandora (P - Get Report).

Earlier this year, I visited Pandora's Oakland headquarters. I was in the minority on Pandora; therefore, I had to go the extra mile vis-a-vis due diligence. I refused to rely solely on my instinct and standard research.

I came away from my chat with Pandora co-founder Tim Westergren more confident than ever in my long position.

Ever since Facebook's (FB) IPO blowup, pressure on social media stocks has intensified. Looking back, it's clear Zynga deserved the stereotype of social media loser. Not Pandora; it suffered guilt by association.

Before it became obvious, nobody gave Pandora credit for how well positioned it is in the broad new media and mobile spaces.

When I met with Westergren, he credited Steve Jobs's invention of Apple's (AAPL) iPhone with Pandora's raging success. Westergren and his team at Pandora saw the shift to mobile coming before the media and bearish Wall Street analysts a) started writing about it and b) incompetently misunderstood it.

Not only did Pandora understand the dynamics of mobile migration, it prepared for them. And, as Chairman and CEO Joe Kennedy explained on Wednesday's impressive earnings call, the interactive nature of Pandora as a visual and auditory platform provides display advertisers with more mobile real estate and audio spots with an already tuned-in audience. And, of course, Pandora can mix approaches across ad types and user platforms.

If you connected the dots on Pandora, faith has been rewarded.

Mobile revenue came in at $59.2 million for the second quarter of 2013, up 86% year-over-year. Pandora now derives more revenue from mobile than it does the desktop.

Pandora can target anybody with a budget, but its ability to focus on the $14 billion traditional radio ad market gives it edges practically everybody chose to ignore.

First, all Pandora sales executives across the country have to do is turn on the radio for the good leads.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
ZNGA $2.77 1.84%
P $16.32 3.16%
AAPL $123.25 -0.80%
FB $83.30 0.35%
GOOG $548.34 -1.23%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs