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Pandora Media, Inc. Message Board

  • twineberg2 twineberg2 Nov 16, 2012 3:30 PM Flag

    I don't think longs understand earnings multiples

    Really if this company can't make money now how is more scale truly going to help? And with all this potential competition eating away at future user growth?

    Really you're willing for it to take 89 years to get your investment back? Its too rich for me. If this stock corrected to into the 3's I'd pick it up as a speculative stock. But this high a multiple for so much uncertainty and a flawed business model that scale won't help. The only thing that could help is a lowering of the royalty rates but that doesn't seem to be in the cards.

    Who knows what earnings will do next week. Wouldn't be surprised if they beat, met, or missed estimates! Currently short and doing allright. Of course will get potentially creamed if earnings beat.

    Sentiment: Sell

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    • Even if P beats earnings and the stock goes up, it will be short-term and will fall again to new lows. Check the charts around each (non)earnings call...typical pop and drop.

      And yes, you are 100% correct in your assertion that P longs don't understand earnings multiples, or any metrics for that matter. They think because their kids or friends use it that it HAS to be a good investment. Of course that completely ignores the fact that the more hours P streams, the greater the costs are. And with a free ad-based service, there is no loyalty or switching costs, so as soon as the ads become too frequent users will flock to the next fad.

      This was a classic case of VC's and insiders wanting to cash out and get some sort of ROI, and they did. Unfortunately the retail investors funded the VC's/insiders gains and are left holding the bag at a steep loss.

 
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