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TheStreet Open House

Pandora Crashes, But Is It Dead?

Stocks in this article: P

NEW YORK ( TheStreet) -- Pandora (P) reported a quarterly profit. And nobody cares.

That's because the company slashed Q4 guidance, citing concern from advertisers over the fiscal cliff.

Of course, this turn of events -- as is protocol -- led Pandora's stock to crash. If history repeats, it will rebound over the next several weeks until something else "bad" happens -- say Apple (AAPL) launching iRadio -- only to crash again.

This is a fantastic day trader's or swing trader's stock. Unless you have a world of patience, an ultra-bullish take on Pandora's future and, preferably, more-than-average covered call writing capability, Pandora is an awful stock for most long-term investors.

It requires nerves of steel and sleeping pills; two things your financial advisor -- even if the little man inside you plays that role -- should never have to prescribe.

It's not dead, but, listen, you either need to trade this thing or own it for another 1 to 3 years, knowing full well that it's a classic case of massive risk in exchange for an only halfway decent potential for massive reward. That's the definition of a highly speculative stock that should comprise a very small portion of your portfolio.

That said -- there might not be a more misunderstood company than Pandora. Last night, I followed the earnings postmortem and not one bit of it gets past the standard focus on short-term noise.

The problems Pandora faces out on sales calls, re: the fiscal cliff, are real. This is exactly the type of holdup the gridlock in Washington causes. While I don't agree with decision makers who use the fiscal cliff as an excuse not to invest in their businesses -- in fact, I think they're losers -- the reality is what it is. This thing puts a drag on economic expansion.

But, that's part of the noise. It's temporary stuff. It says nothing about Pandora's business model, which, by and large, works.

The company continues to pioneer mobile monetization alongside the Twitter powerhouse and Facebook's (FB) emerging platform.

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