Earnings Preview: Pandora Media to Report Q1 Earnings after the Bell
Streaming music provider Pandora Media (NYSE: P) is expected to report Q1 2013 earnings after market close today. The consensus analyst estimate for Pandora's Q1 loss per share is $0.18 on close to $74 million of revenues. For the following quarter, analysts are expecting a loss per share of $0.03 on revenues of nearly $100 million.
The company is down approximately 12.5% since market close last Wednesday, May 16th, as many social media stocks such as Yelp (NYSE: Yelp) and Quepasa (NYSE: QPSA) have also seen significant downward price movements. This might make investors wonder if Pandora has inappropriately been lumped in the same category as social media stocks, and thus fallen in association with Facebook's IPO.
At this point, not much is social about using Pandora's site. If users want to share the music they hear on Pandora, they will likely do so on Facebook, Twitter or other more socially interactive sites. Pandora seems to place a greater emphasis on music discovery through computer algorithms than social interaction. Thus, Pandora could face different secular forces than social media sites, such as music licensing costs and competition from other music sources.
Analysts do not expect the company to see a profitable full year until fiscal 2014. Of course, analyst's estimates for Pandora's fiscal 2014 EPS vary widely, ranging from a loss per share of $0.25 to earnings per share of $0.50. Predictions of Pandora's future are clearly up for debate.
Using the consensus analyst estimate for fiscal 2014 EPS of $0.03 and Pandora's current stock price, the company has a price-to-earnings multiple in excess of 300. So, without a price decline, it seems that the company must either exceed consensus analyst expectations or be faced with a relatively high earnings multiple.
Shares of Pandora were trading approximately 10 cents, or 1% higher for the day.
Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.
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