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Pandora Pops: What Wall Street Is Saying (Update 1)

Updated from 8:16 a.m. EST to reflect turn around in share price and notes from JPMorgan.

NEW YORK (TheStreet) -- Pandora Media (P - Get Report) shares rose in early trading Friday, after the Internet music giant reported revenue that beat Wall Street estimates for the third quarter but guidance missed expectations.

Oakland-based Pandora earned 6 cents a share on $181.6 million in revenues, up 50% year over year. Analysts surveyed by Thomson Reuters were expecting profit of 6 cents a share on $174.8 million in revenue. Of the $181.6 million in sales, advertising revenue accounted for $144.3 million, of which $104.9 million came from mobile.

Subscriptions and other revenue totaled $37.2 million, up 156% from the year-ago quarter.

For the upcoming fourth quarter, Pandora said it expects to earn 2 cents a share, with revenue between $185 million and $190 million. Analysts were expecting a bit more, with Pandora expected to earn 4 cents per share on revenue of $187.6 million.

Despite the drop in the share price, analysts were largely positive on the quarter, noting the strength in mobile advertising and users, particularly in the face of Apple (AAPL - Get Report) iTunes Radio, which launched during the quarter.

Even with the slight gain in shares on Friday, Pandora was still one of the year's top-performing stocks. Shares are up 223.1% year to date, blowing past the 25.9% gain seen in the S&P 500.

P ChartP data by YCharts


Pandora had 70.9 million active users at the end of the quarter, up 20% from a year earlier.

Credit Suisse analyst Stephen Ju (Neutral, $27 PT)

"Ad revenue at $144.3mm was in line with our estimate but exhibited a better mix versus our expectation for mobile as its RPM grew 47% YOY, to reach $104.9mm in mobile ad revenue. Desktop RPM was essentially flat sequentially and YOY. The expected Arbitron accreditation announced on the call should remove a significant friction point against greater ad dollar deployment on Pandora and help close the gap between dollar and listener hour share in the more near-to-medium term. Longer term, we expect advertisers to make better use of the more granular targeting and measurement capabilities inherent with Pandora inventory, which should continue to propel RPMs higher."

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