Could Barack Obama become Spotify's first President of Playlists? Responding to a tongue-in-cheek suggestion by the president, the music streaming service posted a playful job ad for the world leader in his retirement.
If Obama were to pick up a title at his favorite music streaming service, it would increase the company's potential for investors. After all, his curated summer playlists have been among Spotify's most popular. However, Spotify is still privately held (there are rumors of an IPO in 2017).
Although it may be tempting for investors to jump into competitor Pandora (P) , that would be a risky move, especially now. Pandora's story is much like that of Twitter (TWTR) - Get Report : good product, poor monetization and terrible stock.
Pandora shares have been sinking since the end of last week, when hopes that satellite radio company Sirius XM Holdings (SIRI) - Get Report would acquire the company were dashed. Shares fell almost 1% to $12.02 in Tuesday trading.
Speaking at a Citigroup (C) - Get Report hosted conference Jan. 5, Sirius XM CFO David Frear remarked, "With respect to all the chatter about acquisitions, you have to look at them as sort of being not very likely."
CitiGroup is a holding inJim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramerrates the stock here. Want to be alerted before Cramer buys or sellsC?Learn more now.
As soon as the markets opened Friday, shares of Pandora plunged and have continued to do so. Pandora's stock finished Tuesday trading at $12.01 per share, more than 8% below Thursday's $13.09 per share.
In early December, shares in the company had skyrocketed by more than 16% after reports that the company had entered into informal takeover talks with Sirius XM.
Before that, in July 2016, Greg Maffei, the CEO of Liberty Media (LMCA) , which owns a majority stake in Sirius XM, made an offer for Pandora valued at $3.4 billion, or $15 per share. However, Pandora's board refused the offer, remarking that it could get better money elsewhere.
Now it's looking as if that better deal is simply that -- a fairy tale. Pandora's fortunes have been fading as the company struggles to make money.
Pandora is not officially classed as an internet music streaming service. The federal government instead considers the company's product to be an online radio station and therefore subject to radio rules, including controlled prices when it comes to advertising.
During the most recent quarter, Pandora reported that revenue rose by nearly 20% but missed analysts' expectations. To add to the problem, Pandora is losing active monthly listeners who are switching to pure streaming services such as Spotify, Apple(AAPL) - Get Report Music, and Amazon(AMZN) - Get Report Prime Music.
Apple is a holding inJim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramerrates the stock here. Want to be alerted before Cramer buys or sellsAAPL?Learn more now.
Active investor Corvex Management, which owns a large stake in the company, has been pressuring it to sell. "Despite its many strengths, Pandora has been unable, to date, to translate its great product into a great business with an attractive public market valuation," wrote Corvex analysts.
But Pandora's board has been passive, which is costing the company. For full-year 2016, Pandora expects to lose more than $200 million.
Unless an acquisition materializes, Pandora faces mounting obstacles. This stock remains a risky bet. Investors who want a music play should keep their fingers crossed for a Spotify IPO.
Savvy investors should continue to be wary of Pandora. But there's good reason. A blistering financial storm is about to hit our shores. When it hits, weak companies and their investors will be washed away. You need to put yourself on solid ground. And that doesn't just mean changing your investment allocations or loading up on cash. I'll show you how to protect yourself and prosper when you click here.
The author is an independent contributor who at the time of publication owned none of the stocks mentioned.