Pandora Stock Loses Fifth of Value After Thursday Earnings Call
Pandora's disappointing fourth quarter revenue and guidance has led to a major fall on Wall Street. Pandora shares were down 17.3 percent to $15.23 late Friday afternoon after falling as far as $14.62. Trading volume of 31.4 million shares was 5.4 times the stock's daily average of 5.9 million shares.
Some analysts had downgraded Pandora on Friday. Wells Fargo and Raymond James downgraded the stock to "market perform" from "outperform," meaning they believe Pandora's performance will equal, rather that exceed, an industry or benchmark. B. Riley downgraded its rating to "neutral" from "buy" and dropped its price target to $12.50 from $38.00. CRT Capital cut its price target to $16 from $26, Pacific Seacrest Securities dropped its price target to $20 from $35 and Credit Suisse Group dropped its price target to $21 from $24.
Analysts were not without positive comments. The Credit Suisse analyst believes Pandora's guidance may have been conservative. The Pacific Crest Securities analyst still believes Pandora remains a "unique asset that is changing radio advertising" while noting Thursday's earnings report lowered his confidence Pandora can properly leverage its spending.
Although its fourth-quarter and full-year earnings release missed some expectations, Pandora showed growth in many areas. Revenue grew 44 percent to $920.8 million. Its net loss improved to $30.4 million from $40.7 million in 2013. And the company is better monetizing its traffic. Total RPM -- revenue per 1,000 impressions on both desktops and mobile and other connected devices -- increased to $51.54 in the fourth quarter from $44.14 a year earlier.
Pandora shares have lost over half their value -- 52.5 percent -- since reaching a high of $40.44 in March. But its shares have been much lower. Following a brief spike following its initial public offering, Pandora shares were under $15 for nearly the remainder of 2011 and all of 2012. In fact, the company's shares traded under $10 from early October of 2012 through the end of the year.