Shares of the two largest publicly traded music companies soared Thursday (Jan. 30) as markets rebounded from two days of losses. Pandora shares reached a new high of $37.95 before closing up 11% at $36.53, and shares of Live Nation climbed to a 52-week high of $21.44 before closing up 1.7% at $21.16.
Two factors drove an 11% increase in Pandora shares: Facebook's strong earnings release on Wednesday and a positive note to investors by analysts at Goldman Sachs. Facebook beat expectations and revealed it now receives 53% of its revenue from mobile advertising. The news created enthusiasm for mobile-first companies whose future successes are heavy tied to their ability to convert mobile usage into advertising dollars. Twitter, another mobile-first and advertising-based company, also benefitted from Facebook's success. Shares of Twitter rose 6.8% to $63.47, giving the social media company a market value of $35.2 billion.
In a research note sent to investors Thursday, Goldman Sachs argued Pandora shares have potential to double over the next two years. Believing options markets have underestimated the shares' chance of rising in the next year, Goldman encouraged investors to buy call options that would capture significant increases and limit losses in the event of a decline. Thursday's gains pushed Pandora's market value to $7.1 billion.
Live Nation shares had their highest close since $21.45 on Oct. 16, 2007. Six years ago the company's shares began to amidst the onset of the Great Recession. Since its shares hit a low of $9.87 in March 2008, Live Nation has focused on rising demand for festivals, grown through acquisitions, built a strong sponsorship division and benefitted from a return in consumer entertainment spending. The company now has a market value of $4.22 billion.
SFX didn't fare as well Thursday. Shares of the EDM-focused promoter, a publicly traded company since last October, fell 0.1% to $9.26. SFX's shares have fallen more than 14% in the last five trading days and are well below both the IPO price of $11 and the all-time high of $13.39.