Pandora Media (P) was once one of the coolest websites on the Internet.

An online radio service that allowed listeners to discover music to suit any mood, Pandora Media truly presented a "box" full of surprises.

However, the company's business model has left it strapped for cash. Because Pandora Media is classified as an online radio station, the prices it can charge for advertising are subject to government regulation, and because most of its listeners have only free memberships, the company is too dependent dwindling ad revenue.

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Facing increasing pressure from activist investors, Pandora Media started looking for an acquirer about a year ago, and buyout rumors are heating up.

In just five days, Pandora Media's shares have risen nearly 20% on market chatter that Amazon and satellite radio company Sirius XM are interested in buying the company.

In July, Sirius XM's parent, Liberty Media, was thought to be looking for a deal at $15 a share. Pandora Media rebuffed that informal offer, but the $3.2 billion company could change its tune.

Pandora Media's rising stock price this year could be a problem for would-be acquirers. Yet, looking over the past three years, shares of Pandora Media are down more than 49%.

The company's recent results have been disappointing, and it missed third-quarter estimates, posting a wider-than-expected loss of 7 cents a share on revenue of $351.9 million, which was lower than forecast, following disappointing second-quarter revenue as well. In addition, the company's fourth-quarter and full-year guidance isn't encouraging.

Last year, Pandora Media's losses increased more than five-fold from 2014.

Negative operating cash flow over the past four quarters is also a concern.

Pandora Media needs to do more than reiterate its ambitious growth targets and subscription initiatives, but the company is losing both money and subscribers.

The 26 analysts offering 12-month price forecasts for Pandora Media have a median one-year target of $14, just above where it is trading.

It wouldn't be prudent for investors to buy Pandora Media at its price-sales ratio of 2.4 times unless one they think it will be bought at a significant premium.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.