Pandora (P) Falls Some More, Sheds Market Value

NEW YORK (TheStreet) -- Pandora (P) shares continued their downward spiral Wednesday falling 4.7% to $23.12 as of 11:35 a.m. New York time to extend its decline this week to 16%.

Pandora's drop is consistent with other high-momentum stocks, due to investor fears that the extended government shutdown augur badly for an agreement to a government debt.

Pandora shares have also been adversely affected by Bloomberg's Tuesday report that Apple (AAPL) is planning to launch iTunes Radio in overseas markets including the U.K., Canada and Oceania by early 2014. Pandora currently operates in the U.S., Australia and New Zealand, albeit with broadcasting restrictions depending on each country's laws.

Pandora reports it had 72.7 million active listeners in September, a 25% increase from the same period a year earlier. Apple said within six days of its launch last month iTunes Radio had attracted 11 million unique listeners.

TheStreet Ratings team rates Pandora Media Inc as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate Pandora Media Inc (P) a SELL. This is driven by some concerns, 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, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."

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 43.8% when compared to the same quarter one year ago, falling from -$5.42 million to -$7.79 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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.
  • Net operating cash flow has significantly decreased to -$2.32 million or 181.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • PANDORA MEDIA INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PANDORA MEDIA INC reported poor results of -23 cents a share vs. -10 cents a share in the prior year. This year, the market expects an improvement in earnings (4 cents vs. -23 cents).
  • 42.71% is the gross profit margin for PANDORA MEDIA INC which we consider to be strong. 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 -4.94% is in-line with the industry average.

Written by Keris Alison Lahiff.

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