Pandora: Investors Unable to Tune-Out Reduced Outlook

Pandora has struggled with rising content costs, as a larger audience of listeners brings about higher royalty expenses for songs. However, the company blames the reduced outlook on…wait for it…the fiscal cliff. Kennedy explains,“Over the last couple months there has been increasing caution from advertisers. We’re having conversations with advertisers that go beyond end of the calendar year. There are concerns about the effect the fiscal cliff will have on growth, and it’s reduced our visibility. When our clients are cautious, we have to be cautious,” according to Bloomberg. He believes most of the slowdown will occur in January.

CHEAT SHEET Analysis: Technicals on the Stock Chart are Weak

Pandora is a classic example of a great service, but a lousy stock. Shares dropped more than 13 percent in Wednesday trading, adding to the dismal performance of Pandora since its initial public offering last year at $16 a share. Similar to other popular Internet IPOs like Groupon (NASDAQ:GRPN) and Zynga (NASDAQ:ZNGA), Pandora has been in a downward trend since going public.

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