Use access key #2 to skip to page content.

Seansonfire (41.57)

December 2011



Pandora is Losing out to Spotify and Rhapsody

December 21, 2011 – Comments (7) | RELATED TICKERS: P , AAPL , AMZN

Pandora Media (P) is a great idea, and provides a great service to the masses. Unfortunately they are losing out to other services that offer either similar music services or a better experience entirely. Spotify and Rhapsody are two of such services that offer the customer the full experience of choosing their own music, building playlists, and listening at their will to literally anything they want. Pandora does not allow you either the flexibility or the depth that either Spotify or Rhapsody offer. Spotify and Rhapsody due have additional monthly fees for streaming music (where as you can listen to an add supported version of Pandora streaming for free) which may prevent people from using Spotify or Rhapsody.

Overall the value provided by Spotify or Rhapsody much exceeds that of Pandora to the customer. For these reasons I see the growth of Pandora falling short of its own projections as well as those of industry analysts which estimate a 40% y-o-y rev growth of the next 5 years.

The ability for any of these music services including Spotify, Rhapsody, and Pandora to make money in these ever increasingly technically proficient population is still a huge question. Major threats from Bit-Torrent sharing, Apple iTunes and Amazon still make these companies revenue streams highly at risk.

As an investor you should never try to buck the trend, and the trend is away from Pandora.  Just from talking to my friends that are huge music buffs, I see the writing on the wall, and it says Spotify wins and Pandora losses.

Short it if it gets up toward $13 a share in the short term.   [more]

Featured Broker Partners