Trade-Ideas LLC identified

Pandora Media

(

P

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Pandora Media as such a stock due to the following factors:

  • P has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.7 million.
  • P has traded 5.9 million shares today.
  • P is trading at 1.55 times the normal volume for the stock at this time of day.
  • P crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on P:

TheStreet Recommends

Pandora Media, Inc. provides Internet radio services in the United States. The company allows listeners to create up to 100 personalized stations to access free music and comedy catalogs, as well as offers Pandora One, a paid subscription service to listeners. Currently there are 19 analysts that rate Pandora Media a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Pandora Media has been 4.9 million shares per day over the past 30 days. Pandora Media has a market cap of $3.6 billion and is part of the services sector and media industry. The stock has a beta of 1.25 and a short float of 14.3% with 7.01 days to cover. Shares are down 1.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Pandora Media as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 37.0% when compared to the same quarter one year ago, falling from -$11.73 million to -$16.07 million.
  • Net operating cash flow has decreased to -$9.92 million or 39.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 33.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • PANDORA MEDIA INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.19 versus -$0.15).
  • Compared to other companies in the Internet Software & Services industry and the overall market, PANDORA MEDIA INC's return on equity significantly trails that of both the industry average and the S&P 500.

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