This Day On The Street
Continue to site
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

Can Pandora Hit $40 a Share?

As Ciaccia noted, people have finally caught on to the notion that local advertising is a windfall for companies such as Pandora and Yelp (YELP - Get Report). And that Spotify and even Apple's iTunes Radio are complementary to Pandora.

One thing we don't hear about often enough is Pandora's scale.

That's what La Monica failed to mention. And it's a large part of what makes his argument and the leftover Pandora bears' arguments so weak.

Pandora has achieved massive scale. No other Internet radio player -- regardless of delivery style -- comes close to 71.2 million active listeners. It's that scale that allows Pandora to sell advertising. This is how Pandora makes most of its money with a supplemental bump from Pandora One subscriptions.

You simply cannot sell advertising at the national or local level without scale and the ability to effectively target key demographics. Even as Spotify continues to grow impressively, it's doubtful it can achieve the critical mass necessary to sell advertising like Pandora does or put together a high-revenue, profitable subscription business.

While I believe people will pay a monthly fee to access unlimited music, that's the crowded space with equally-as-solid, if not higher quality, easier-to-use services such Rdio encroaching. Nobody does pure-play Internet radio like Pandora does. There's a difference between traditional radio as redefined by Pandora and on-demand services.

If you fail to realize these distinctions, you fail to realize the power of Pandora's unique model and first-mover advantage.

Now, with that said, I do sense a bit of -- for want of a better word -- arrogance at Pandora. There's an unfortunate unwillingness at the company to engage adversaries in the royalty fight, work with competitors such as Spotify or partner with small startups to show the music industrial complex just how data and technology can bring the business into the 21st Century.

People at Pandora might use the word focus in lieu of arrogance. I would respond with Just because Apple will not "kill" you doesn't mean you're Apple.

So, as was the case when everybody was skeptical and I was certain Pandora would rise, I'm taking something that vaguely resembles the other side. While I still believe in the company's story and, quite honestly, want it to succeed, it doesn't sit well with me that Pandora appears to be standing still. It needs to evolve and innovate more now than ever -- during this time of unprecedented success -- because, as the PC industry and Blackberry (BBRY) have taught us, you can't count on scale forever.

-- Written by Rocco Pendola in Santa Monica, Calif.
Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
2 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
Only $9.95
14-Days Free
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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $117.29 -0.85%
P $14.34 3.90%
YELP $30.32 0.63%
FB $107.04 2.70%
GOOG $766.64 3.20%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs