Market Overview

Pandora Could be its Own Worst Enemy

Pandora Could be its Own Worst Enemy

Pandora (NYSE: P), America's largest Internet radio service, traded down more than 19 percent Thursda after the company announced its bleak expectations for the next quarter.

While analysts had anticipated a gain of $0.02 per share, Pandora is expecting a loss between $0.06 and $0.09. This is not a good sign for a company that also announced positive third-quarter results and impressive audience metrics for the month of November.

Pandora faces stiff competition from Spotify, and is expected to go head-to-head with Apple when the Mac maker launches its own Internet radio service.

Despite the growing number of competitors, things had been looking up for Pandora. The Internet radio service jumped more than 15 percent over the last five days (November 28 to December 4). Those gains have been diminished now that investors know what to expect from Pandora's future.

Year-to-date Pandora is down more than eight percent. The company has lost more than 45 percent of its value since it began trading on June 15, 2011.

Despite the weak guidance and devastating market move, Wedbush Securities has reiterated its Outperform rating and $10 Price Target. Stifel Nicolaus was not nearly as kind; researchers at the firm lowered their PT from $17 to $14. Goldman Sachs did the same, lowering its PT from $12 to $11. Bank of America reiterated its Buy rating but lowered its Price Objective from $17 to $16.

Pandora is no stranger to sudden losses. The company plunged more than 12 percent on October 25 after the rumor about an Apple radio service started to spread.

However, Pandora only gained five percent on September 27 when a rumor suggested that Samsung may be interested in acquiring the firm. Those gains were diminished a few days later. Comparatively, Pandora only gained about two percent on October 3 when a rumor claimed that Apple wanted to buy the firm.

Follow me @LouisBedigianBZ

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