continues to solidify its position in the U.S. web-based radio
market, as listening hours jumped 18.0% from the year-ago month
to 1.49 billion in Nov 2013. Listening hours were also slightly
better than 1.47 billion reported in October.
Additionally, Pandora's share of total U.S. radio listening
market surged to 8.44% compared to 7.17% in the year-ago month
and 8.10% in Oct 2013.
We believe that the rise in listening hours may have resulted
from Pandora's change of policy related to listening limits. In
September, the company cancelled the listening limit (40 hours
per month) imposed on free users.
Pandora exited the month with almost 72.4 million active
listeners, in comparison to 62.4 million a year ago. However, the
number of active listeners declined over the month from 72.7
million in Oct 2013.
We believe that the slowdown resulted from the stiff competition
the company is facing from
iRadio service. As an increasing number of people try iTunes
Radio, we believe that Pandora will lose some market share, going
However, 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,
Sirius XM (
Additionally, Pandora had raised approximately $400.0 million
from stock offering in September. The company expects to use a
portion of the proceeds for international expansion. The company
will also open new sales offices and compete with radio stations
for attracting local advertising, which is a significant
opportunity, going forward.
Nevertheless, we believe that rising costs related to licensing
and intense competition are the major headwinds in the near term.
Currently, Pandora has a Zacks Rank #3 (Hold).
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