10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

The largest discount in the last 10 years

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Here's Why Pandora Media Is an Enticing Investment

July 29, 2014 | About:
rusticnomad

rusticnomad

0 followers

Pandora Media (P) is showing signs of recuperation. The web radio purveyor reported better-than-anticipated results for the first quarter in April. Its revenue was up year-over-year, while the loss contracted. As per CEO Brian McAndrews, an increase in listener engagement and better adaptation prompted a solid performance in the previous quarter. In any case, because of Apple's (AAPL) always developing presence in radio, will Pandora have the capacity to keep making strides? How about we figure out.

Improving

Pandora has successfully enhanced user engagement, which prompted a jump in listening hours in the previous quarter from the year-prior period. The organization has figured out how to attain this by offering new features such as a wake up timer, sleep clock, and station recommendations service to its listeners.

Individuals using Pandora's wake up timer usefulness on Android are using the radio service 30% more days per week and 3% more hours every day. Likewise, the company has also increased its market penetration, which means that individuals have more prominent access to its web radio than some time recently. As indicated by management, Pandora is accessible in almost every best-selling auto and has more than 5 million users through its local car integrations.

With these solid strategies, it is not surprising to see that Pandora's adaptation is improving. It reported strong progress in adaptation. Its advertisement revenue per thousand impressions (RPM) increased 44% year-over-year to $29.46. Supported by this solid hop, it rolled out significant improvements to advance Pandora One. This includes a modest value increase for new subscribers, which will produce results from the second quarter onward.

Also, the organization plans to spend aggressively on advertising moves to bolster its standing in online radio. Anyhow, this will impact its bottom line in the short run. As a result, Pandora issued a frail forecast for the ongoing quarter, which prompted a colossal drop in the share price.

Opportunities

Pandora is striving to increase its user base furthermore give new opportunities to advertisers. Pandora is experimenting with new imaginative ideas that will improve listeners' experience.

It is joining forces with Peet's Coffee & Tea. This is the first occasion when that Pandora has joined forces with a brand in a brick-and-mortar segment. Under this partnership, Peet's will have radio stations on Pandora. The radio stations will also be made accessible to all Pandora listeners.

Pandora is aggressively increasing its advertising base. It included three new markets in April, and now has an aggregate of 37 nearby markets where it has a sales presence. Also, it has also utilized an inside sales group of something like 40 individuals to develop neighborhood promotion revenue in the 239 markets where Pandora doesn't have a strong presence.

Going ahead, the organization is confident about its prospects and is relying on its capability to power its strong brand to rethink radio in a connected world. Also, it has reorganized its top management and hopes that this new group, which has an extensive variety of skills and experiences, will transform it into a more profitable business.

Apple's Carplay is a worry

Pandora's development will unquestionably be tested by Apple within a brief period. Apple announced Carplay back in March with a point of making it easier for users to connect with their iPhone while driving. By using iPhone's Siri, drivers will have the capacity to make calls, explore, furthermore use apps.

As Apple has put Pandora on the backburner and is bolstering it radio service, the quick adoption of Carplay may harm Pandora in the long run.

Conclusion

Pandora administration is taking various initiatives to increase the business. Its focus on adaptation and a strong user base should pull in more advertisers going ahead. Also, extra user-accommodating features could strengthen its customer base. While Apple is probably a risk, investors should not overlook that Pandora's bottom line is expected to enhance at a yearly rate of 41% for the next five years, making it a luring investment.


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK