Tomahawk, WI 9/16/2013 (BasicsMedia) – Pandora Media Inc (NYSE:P) operates as an Internet radio with more than 125 million registered users in the U.S. This figure is based on the data which was released in January 2012, and there is a strong possibility that it is now much higher than it has ever been in the past. Its services are specially designed to enable registered users create their own customized stations depending on the artists whose music they want to listen to. It operates two models through which its services are offered to its registered users, namely, Pandora One and Free Service.


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How is Pandora’s Stock Performing?

Within the last 52 weeks, P’s stock has reported a high of around $24.43. This week, it also reported a surge in its stock to reach $24.03, which is not very far from its 52-week high. One of the reasons for this turn of events has been attributed to the company’s decision to appoint Brian McAndrews as the new CEO, Chairman and President. This is a professional with a proven track record in the area of digital advertising. P already occupies a very special place in that it is the largest online radio service in the U.S, and Brian is expected to help it cement this position.

Which is P’s Biggest Competitor?

If you are to understand how much potential a company such as P has, you would have to take keen interest in its revenue from ads. In the FY12, the company reported that ads made up 88% of the total revenue it enjoyed for the whole year, which was $427 million. This is an impressive amount considering that Pandora’s biggest competitor is the Apple iTunes Radio, which is yet to be launched. The company may not have enjoyed the level of profits it expects to, as seen in the image above, but its customer base has been improving from one quarter to the next regularly.

Pandora’s Greatest Potential and Viability for Investment

The company reported that its 72.1 million loyal customers have spent more than 1.3 billion hours using its services or listening to its programs. There is a lot of optimism, which I also share, regarding Pandora’s remarkable future seeing that it is now under the able leadership of an experienced professional such as Brian McAndrews. Brian enjoys a great deal of experience in the areas of both advertisement and entertainment, and there is firm trust and confidence in his leadership. I believe the company is about to embark on a period of increased profitability.

Optimism does not always translate into the kind of results which a company expects or looks forward to. The market appears to have embraced the new appointment of Brian McAndrews as the new CEO, Chairman and President quite well. However, his task is made more difficult based on the fact that its business model lacks what investors traditionally look for such as profits and free cash flow. The absence of earnings denies investors the use of a key fundamental feature with which to base their valuation as to whether Pandora Media is worthy or not.

Although it burns a lot of cash, the fact that it is adequately funded makes it an attractive proposition to investors. It has reported reduction in losses, an increase in free cash flow (although at $6.8 million this is still quite a tiny sum) and increased revenue within 2013, signs that it is turning a corner for the best.

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