NEW YORK (TheStreet) -- Pandora Media (P) stock is increasing 1.73% to $14.44 on heavy trading volume on Wednesday after the company completed the $75 million acquisition of Rdio's technology and intellectual property.
The acquisition will allow the music streaming platform to create a multi-tier subscription model in 2016 and compete with other streaming services, such as Apple (AAPL) Music and Spotify.
"With its industry-leading Internet radio product, the recent acquisition of Ticketfly and the great talent, technology and IP of Rdio, the company will bring to bear a technology stack, monetization engine and data asset without peer," the company said in a statement.
The acquisition was approved by the U.S. Bankruptcy Court of the Northern District of California on Tuesday. Rdio, which filed for bankruptcy in November, discontinued its services after the ruling.
Additionally, Pandora announced it signed a multi-year licensing agreement with Atlas Music Publishing to access its music catalog that includes John Legend, Daughtry, Icona Pop and Colbie Caillat.
So far today, 9.7 million shares of Pandora have exchanged hands, compared with its average daily volume of 8.4 million shares.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate PANDORA MEDIA INC as a Sell with a ratings score of D. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 4143.4% when compared to the same quarter one year ago, falling from -$2.03 million to -$85.93 million.
- The share price of PANDORA MEDIA INC has not done very well: it is down 12.80% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- PANDORA MEDIA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This year, the market expects an improvement in earnings ($0.11 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.
- The gross profit margin for PANDORA MEDIA INC is rather high; currently it is at 53.47%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -27.58% is in-line with the industry average.
- You can view the full analysis from the report here: P