Would You Buy Pandora Media for $18 a Share?
-- Barrington Research initiated coverage on shares of Pandora Media (NYSE:P) this week. Its analysts set a price target of $18 and gave the stock an "outperform" rating. The note to investors said Barrington analysts expect U.S. mobile ad revenue "to advance significantly from its nascent stage" and Pandora is well positioned to be a leader.
The billion-dollar question, however, is whether or not being a market leader is justification for market capitalization in the area of $3 billion (Friday's closing price of $15.30 puts the company's market capitalization stands at $2.47 billion). BTIG analyst Richard Greenfield is bearish on the stock currently has a price target of $3.75. While Greenfield acknowledges Pandora market leadership, he does not believe the economics of webcasting justify such a high valuation.
Bearish sentiment is understandable. The company could earn relatively little while it transforms the radio business over the next decade. The economics of webcasting are difficult - even with growth in users and revenue - and unlike those of other information-based technology companies. And there will be additional competition as companies jump in the growing market (see iHeartRadio). Even if Pandora continues to be a successful company, it may not be an incredibly valuable company. A market capitalization of $3 billion implies Pandora will, at some point in the near future, be generating hundreds of millions of dollars in earnings, not the tens of millions of earnings Greenfield thinks it could generate by 2015.
But aside from Greenfield, there are numerous analysts with price targets at or near Pandora's current stock price. Wedbush has Pandora at $14 and "outperform." Citigroup initiated coverage with a price target of $25. Well Fargo set a $21-$23 price target. Optimism is not in short supply.
Pandora's stock had a good week, finishing up 3.66 percent at $15.30 on Friday and ending the week up 16.7 percent. Not bad for a week when a Bloomberg report on Pandora's difficulties in attracting mobile advertising dollars was all over the Internet. ( Street Insider)
How Technology Has Changed Live Music …
-- Just how much have mobile devices infiltrated live music? Just look at how they have replaced lighters at venues around the country, writes Russell Wallach, president of Live Nation Mobile. His guest post at CNBC explains how live music is fundamentally the same - people buy a ticket and attend a concert, usually with friends - but drastically different in how mobile technology augments the experience.
"Today, the fundamentals of the concert experience - hearing about a show, rallying your friends to buy tickets, going to the show, and recounting the experience to everyone you know - are the same, but the means are greatly modernized through mobile technology," he writes. "Mobile has opened up myriad opportunities to instantly connect fans to their favorite artists, their friends and each other, and, by extension and association, connecting brands to consumers (the fans) before, during and after the show."
Wallach then lists four trends on mobile and live music. First, music lovers will lead the charge in mobile commerce. Second, mobile is the ideal platform for ticket purchases. Third, location-targeted mobile marketing will help brands target fans at concerts. Fourth, today's fans actively use mobile devices at concerts.
He offers three interesting statistics that show mobile's potential: 30 percent of Live Nation ticket buyers say they would buy tickets on a mobile device, 30 percent don't buy a ticket for a show because they didn't know about it, and 47 percent of ticket buyers said they texted or emailed their friends during shows.
Yeah, mobile devices are quite good for live music. Just think of the last show you attended where the first ten rows of people weren't holding up their smartphones to take pictures, or how often you see people bored with the opening act killing time by texting their friends. (CNBC)
Official.fm Staffs Up
-- Official.fm has added three new executives and now has an office on each U.S. coast. The new hires are Lucas Gonze as Chief Technology Officer, Jason Herskowitz as Chief Product Officer, and Chuck Fishmanas as Partner Relations Director. Herskowitz joins Head of Content & Business Affairs, Amaechi Uzoigwe, in Official.fm's New York office. Gonze and Fishman will work out of the company's San Francisco office. Official.fm's headquarters are in Geneva, Switzerland.
Gonze and Herskowitz are both well known digital music veterans. Gonze was the Product Manager at music subscription service Mog. Herskowitz was recently VP Product Management at LimeWire and previously worked at TotalMusic and AOL.
Official.fm is a platform for music creators and industry professionals to manage audio content and customize their digital footprint. The company has a free level of the service as well as a $30-a-year premium service that allows artists and labels to upload as many as 200 tracks for distribution and tracking across the Internet. Premium, or "Pro," account holders also get access to a desktop track manager, advanced analytics, embeddable tour widgets and the ability to offer fans downloadable playlists in exchange for email addresses