Albert Fried & Co: Pandora is desperate for growth

Rich Tullo, an analyst at Albert Fried & Co. issued a company note on Pandora Media Inc. P. Albert Fried & Co. currently rates Pandora as underweight with an $11 price target.

Tullo wrote, “We don’t get management’s comments bashing music streaming as Pandora spent $75 million on buying music streaming assets. We think the $300 million announced convertible bond offering makes sense as Pandora is spending like a rock star on M&A deals... Combined we think all this points to a management team that is facing flat to declining user growth, a vital element for programmatic advertising, and higher costs.”

Tullo, who called himself “the biggest if not the only bear” covering Pandora in a Benzinga article from October 2014, has seen user growth decline in the music streaming company and lag behind their competitors. Albert Fried & Co. believes that user growth will continue to be hurt due to a possible fee escalation to pay for the increasing M&A costs. As he mentioned in the Benzinga article from 10/2014 Tullo called shares of Pandora “dead money” and suggests that investors sell into any rallies as he sees the company continuing to struggle with growing their core business operations in the near term.

Currently, Pandora is trading at $13.61, down 4.70 percent.