Pandora Media Inc.
), the largest online radio streaming service provider in the
U.S., is suffering from growing competition in the broadcast
radio industry. Despite a healthy auto industry, the driving
force of broadcast radio services, the stock price of Pandora
slides by 8.55% to $17.97 yesterday. This somber condition is
mainly due to growing competition from satellite radio operator,
SIRIUS XM Radio Inc.
), and the upcoming iTunes online radio service of
Pandora provides music services to laptops and next-generation
smartphones, mainly, iPhone and
) developed Android-based mobile devices. Pandora is currently
available in 100 different car models. The company had 71.1
million active listeners at the end of Jun 2013.
Meanwhile, Pandora is expected to face a major challenge from
Apple. The company is on the verge of introducing iTunes radio
service, which will offer hands-free voice control in
automobiles. The connected car concept generates majority part of
its revenues from the broadcast radio industry. While Apple will
enter this segment with online streaming services, the satellite
radio operator, SIRIUS XM, is continuously gaining market
SIRIUS XM recently announced that it has added a net 715,000
customers in the second quarter of 2013. This is a
record-breaking achievement for the company. Its total subscriber
base has crossed 25 million. On the other hand, Pandora stated
that its listener's hours in Jun 2013 were 1.25 billion, which
was 100 million less compared with May 2013. Similarly, Pandora's
share of the total U.S. radio listening market slid to 7.04% in
Jun from 7.29% in May 2013.
Nevertheless, Pandora has also made significant inroads into
the automotive aftermarket sector. Currently, it has business
agreements with 8 manufacturers. Management seems confident to
counter the competitive threats with new innovative products but
that may raise the company's marketing and R&D expenditures.
Currently, Pandora has a Zacks Rank #3 (Hold).
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SIRIUS XM RADIO (SIRI): Free Stock Analysis
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