Pandora (P) Stock Falls After Court Ruling

NEW YORK (TheStreet) -- Shares of Pandora (P) were falling 2.8% to $18.29 Friday after the music streaming company lost a royalty rate case to music publisher BMI.

Following the New York Rate Court ruling Pandora will have to pay 2.5% of its revenue to songwriters and music publishers, up from 1.75%, according to the Associated Press. The ruling contradicts a 2nd U.S. Circuit Court of Appeals in New York court ruling against the music publishing group ASCAP last week that held up Pandora's 1.85% rate.

Pandora said it plans to appeal the new ruling.

"This is an important step forward in valuing music in the digital age," BMI said in a statement following the ruling.

About 2.7 million shares of Pandora were traded by 11:34 a.m. Friday, compared to the company's average trading volume of about 5.8 million shares a day.

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 several 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. Among the areas we feel are negative, one of the most important has been generally deteriorating net income."

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 66.8% when compared to the same quarter one year ago, falling from -$28.93 million to -$48.26 million.
  • 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 ($0.19 versus -$0.15).
  • The share price of PANDORA MEDIA INC has not done very well: it is down 16.60% 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.
  • 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.
  • 40.24% 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 -20.91% is in-line with the industry average.
  • You can view the full analysis from the report here: P Ratings Report

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