Pandora Inc. (
soared 14.1% ($3.90) to close at $31.49 on Jan 6, after the
Internet radio service provider announced that listening hours
jumped 13.0% from the year-ago month to 1.58 billion in Dec 2013.
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Listening hours were also better than 1.49 billion reported in
Nov 2013. Pandora's change of policy related to listening limits
(40 hours per month) in Sep 2013 continues to drive strong growth
in listening hours.
Additionally, Pandora's share of the total U.S. radio listening
market increased to 8.60% compared to 7.58% in the year-ago month
and 8.44% in Nov 2013.
The company continues to solidify its position in the U.S.
web-based radio market. Active listeners at the end of December
were almost 76.2 million, compared with 67.1 million a year ago.
The number of active listeners also increased from 72.4 million
in Nov 2013.
The significant growth in active listeners is encouraging amid
stiff competition from
iTunes Radio service. However, we believe that as an increasing
number of people try iTunes Radio, Pandora will lose some market
share, going forward.
Nonetheless, we note that Pandora enjoys a first mover's
advantage in the music streaming industry. We believe that the
company's already popular service, driven by its effective
discovery engine and well established infrastructure, places it
well to compete against the likes of Apple, Spotify and
Sirius XM (
Pandora's announcement that it is launching in-car advertising
from this month is a major positive in the long run. The
company's partnerships with major car manufacturers such as
Ford Motor Co. (
will help it to launch the service in more than 130 models.
Reportedly, Pandora is developing ads that will be based on user
preferences. This targeted ad offering will further boost
advertising revenues (88.0% of revenues). However, rising costs
related to licensing coupled intense competition may hurt
profitability in the near term.
Currently, Pandora has a Zacks Rank #3 (Hold).