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Some analysts think it will be a long time before Pandora turns a profit, if ever

Pandora is an internet radio company that has been around for more than ten years. The company has not been publicly traded until recently when Pandora had its IPO. Early on shares in the company soared as high as 48% from the IPO price.

The problem was that the stock then turned around in late trading and prices tumbled, yet it still ended up above its opening price. That means that people who bought early are still doing well enough on the stock, but those that bought later in the day are facing a loss in a single days trading. The reason for the about face on the stock has to do with concerns of whether or not Pandora will even be profitable.

The problem is that Pandora is growing its user base very quickly and the ads sold to support the network aren’t growing nearly as fast. This raises concerns of whether or not Pandora will be able to turn a profit in the future. 

Pandora listeners are also migrating more and more from listening via their computer to listening on a mobile device and mobile ads are worth even less than ads on computers. Pandora CEO Joseph Kennedy said, "We are tremendously focused on providing a great listener experience and that's what has gotten us to this point."

The stock's IPO price was $16 per share and it closed the day at $17.42 per share. Some analysts are calling for investors to avoid Pandora stock for now. Analyst Rick Summer from Morningstar has a target price on the stock at $6 per share. The WSJ reports that Pandora CFO Steve Cakebread thinks that its margins will improve as listener hours slow down. 

Cakebread said, "[We should] improve operating margins as our listener hours slow down." The WSJ also lists the value of Pandora at $3.1 billion fully diluted and notes that a limited float of 95 is driving shares up higher than the first day of trading.



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RE: The problem with Pandora is simple...
By Amiga500 on 6/16/2011 2:12:47 PM , Rating: 2
quote:
When their CEO comes out and says this is not his goal right now, we make him suffer for it.


Too bad so sad.

If you don't have the patience for a long term business plan, then don't invest in them.

The desperation of people for instant profits and returns are key to the stock market and financial institutions f**k ups over the past 15 years coming to a head in 2008.

"The market" seeks instant profits, regardless of the long term consequences - well f**k the market - the company doesn't see a penny beyond the initial share price or any re-issue of stock - therefore they should have no need to pander to idiots wanting to see $5 this year at the expense of $10 next year.


By MrBlastman on 6/16/2011 2:19:16 PM , Rating: 2
quote:
The desperation of people for instant returns are key to the stock market and financial institutions f**k ups over the past 15 years coming to a head in 2008.


Fixed for you. The reason it was messed up the first time around is people were pumping money into companies that couldn't earn a dime and weren't even promising a dime other than their big great name and idea.

This of course, failed miserably.

No, we now expect profits, or at least a solid plan towards it. It's okay to come out and say we aren't expecting profits for 6-12 months--we will punish them for saying so, but they can stop the bleeding by giving us some sort of logical plan to fix their income statement.

You don't just give a company money at the primary offering out of generosity like they are a charity. It also isn't logical to think you'll double your money in a day either.


“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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