Pandora (NYSE: P), an internet radio company, reported yet another ‘loss making quarter’, although its revenue had grown 55% Y/Y to $157.4MM. The top line guidance increase of $20MM along with an Earnings Per Share guidance decrease of $0.05 annoyed investors. Shares are trading down about 5.2% in the after-hours market at $20.59. Content acquisition costs and selling general & administrative costs as a percentage of revenue have reduced drastically, but these reductions aren’t just good enough to breakeven its losses yet.
Seems like the trial quarter of ‘40 hours of free listening’ cap, which was introduced to manage the royalty cost, didn’t go very well. Post the announcement of quarterly results, Pandora announced it will remove the 40-hour-per-month limit on free mobile listening effective September 1, 2013. Given the lack of profitability and its over-dependence on advertising revenue, Pandora doesn’t seem like an attractive investment option to us in the near-future.
To see Pandora’s latest stock price movement, click here (NASDAQ: P)
Other Interesting Articles: