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TheStreet Open House

Why Pandora (P) is Sinking in Pre-Market Trading

NEW YORK (TheStreet) -- Online radio broadcaster Pandora (P) issued guidance which saw shares sink in pre-market trading, days after competitor Sirius XM (SIRI) beat expectations in its own earnings release.

In pre-market trading, shares had tumbled 9.9% to $32.27. Shares of Sirius were unchanged.

The company said per-share earnings in 2014 are expected between 13 cents and 17 cents, short of expectations for 19 cents a share, according to analysts polled by Thomson Reuters. For the first quarter ended March, a wider-than-expected loss of between 16 cents and 14 cents a share is forecast, compared to consensus of a 12-cents-a-share loss.

Less-than-expected profitability is a result of rising costs as the company strives to snap up a greater share of the market.

"We remain intensely focused on advancing Pandora's mission to reinvent radio. To fully capture the substantial market opportunity ahead of us, we will continue to aggressively invest in 2014 in sustained audience and engagement growth," wrote CEO Brian McAndrews in a statement.

Though it is one of the most popular online radio services, it has formidable competition from Sirius, Apple's (AAPL) iTunes Radio and Spotify.

In January, Oakland-based Pandora active listeners dropped nearly 4% from December, a result of seasonal fluctuations, but were up 12% from a year earlier. Share of total U.S. radio listening was 8.57%, up from 7.68% in January last year.

Weak guidance overshadowed Pandora's most profitable quarter since its IPO in 2011. The company reported fourth-quarter net income of 11 cents a share on $200.8 million in revenue. Analysts anticipated earnings of 7 cents a share on sales of $201.1 million.

Full-year net income of 6 cents a share exceeded consensus by 4 cents, while revenue of $647.5 million (56% higher than a year earlier) came in as expected.

Must read: Wall Street Must Demand Answers From Pandora ... Now

Must read: Sirius XM (SIRI) Scores With Record Revenue, Subscribers

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