Pandora Investors Worry About Future After Earnings

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“2013 marked notable growth from user metrics to financial achievements,” Pandora (NYSE:P) CEO Brian McAndrews said in the company’s fourth-quarter and full-year earnings press release. “We remain intensely focused on advancing Pandora’s mission to reinvent radio.” While it is true that Pandora has accelerated its market position in the United States, with its Internet streaming service accounting for nearly 8 percent of all radio listening hours, the company only collects 2.5 percent of radio advertising dollars.

So while analyst expectations for fourth-quarter earnings and revenue were high ahead of the Wednesday earnings report release, the company is likely to face tough questions during its post-earnings conference call as to why it has not leveraged what is the service’s most lucrative asset: its user data. Pandora will also be pressed to explain how it can use the user data it has collected to generate revenue outside of traditional advertising and sponsorship models.

Analysts polled by Thomson Reuters expect Pandora to earn 8 cents per share on $133 million in revenue — a slight improvement from the 6 cents per share on a revenue of $125.1 million reported in the year-ago quarter. Contributing to this newfound strength is the company’s recent integration into leading radio ad-buying platforms and its launch of an in-car advertising platform with companies like Ford (NYSE:F), BP (NYSE:BP), and Yum Brand’s (NYSE:YUM) Taco Bell.

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