Market Overview

Pandora Media Inc Shares Are Oversold And Teetering

Pandora Media Inc Shares Are Oversold And Teetering
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Volatile Pandora Media Inc (NYSE: P) shares have been getting hammered since the middle of September, falling from over $28 in early September to right around $23 on Wednesday. The stock on Thursday bounced to close at $24.17.

Technicians are calling for more carnage in the stock, but it doesn't seem to want to break support in a convincing manner.

What The Bulls See

  • A strong balance sheet: $324.28 million in cash versus $0 debt for the company and a current ratio of 3.40.
  • Positive operating cash flow of $4.88 million annually.
  • Valuation metrics that properly reflect the company's explosive revenue and EPS growth prospects: a price-to-earnings ratio of 48 is appropriate given the company's estimated 2015 revenue (31.4 percent) and EPS (183.30 percent) growth estimates.

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What The Bears See

  • A company that has shown a pattern of falling short of analysts' expectations when reporting quarterly results.
  • No net profits yet, despite showing operating profits of more than $4 million annually.
  • An expensive stock: its market capitalization of $5.2 billion trumps the enterprise value of $4.47 billion, a price-to-book of 9.24 and price-to-sales of six.

Technical Take

Technicians note that Pandora is set to decline a bit further before the selling abates for a brief period of time. The projected support levels for Pandora at this point come in at $22.49 and $20.09. Any rallies that occur off of those support levels should make it up to $24.90 before a new round of selling comes into play.

Stock chart: 
Stock chart

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