Market Overview

Analyst Says Spotify's Move Toward Free Mobile Aimed At Disrupting Pandora's Sound Exchange Negotiations

Related P
Morgan Stanley More Convinced Pandora Can Secure Broad Rights Without Giving Up Core Economics
Axiom: Buy The Post-Earnings Weakness In Pandora
Pandora rebounds, up 3.8%, as analysts parse mixed quarter (Seeking Alpha)

Pandora (NYSE: P) shares have fallen more than 6 percent since a DJ report Thursday afternoon suggested Spotify is looking to unveil a free mobile music service. The stock is down about 3 percent to $28.49 with about an hour left in this week's trading.

Albert Fried's Rich Tullo earlier considered the implications of such a Spotify initiative on Pandora and the company's stock. The analyst maintains an Underweight rating and $23 price target on Pandora shares.

Tullo believes Spotify is moving toward the IP radio market in order to "disrupt Pandora's upcoming Sound Exchange negotiations" -- not steal market share -- a point several sources had suggested on Thursday.

"If Spotify's rate card discussions are accurate, we think 2014 will be a tough year for Pandora from a news flow perspective. We expect the Sound Exchange and the music industry to push hard on making rate concessions because artists may be going into the negotiation from the position that Pandora needs to pay 4x to 10x more per performance," Tullo said.

The Albert Fried analyst believes Pandora must create "new model outside of IP radio where artists can drive income."

Tullo's price target on Pandora suggests potential downside of about 19 percent from where the stock is trading Friday afternoon.

Latest Ratings for P

Jul 2016Pacific CrestDowngradesSector WeightUnderweight
Jul 2016Piper JaffrayUpgradesNeutralOverweight
Jun 2016Morgan StanleyUpgradesEqualweightOverweight

View More Analyst Ratings for P
View the Latest Analyst Ratings

Posted-In: Analyst Color News Rumors Analyst Ratings Movers


Related Articles (P)

View Comments and Join the Discussion!