The FISCAL CLIFF may actually BENEFIT Pandora.(P) Here's why:
What is the Fiscal cliff?
It nets out to degradation in business climate, due to increases in taxes and unfriendly business legislation.
Recession, in a nutshell.
So why would this help Pandora?
I think it impacts positively the two key metrics of this companies business: Listeners, and Advertisers.
It is a misconception to believe that during hard times companies pull in their advertising dollars. Untrue. What they do is "optimize" those dollars. So instead of spreading it around in hopes of catching fish all over the lake, they instead concentrate those dollars in the most effective channels. Pandora's ad sales are growing largely because of the effects of accurate "targeting" and critical mass in listener growth.
Which leads me to the second metric of "listeners" or lets call them "clients". In a recession do you think more folks listen to FREE radio as opposed to say SIRI? Lets face it, we listen to Pandora because of quality and content and ease of access, and free is icing on the cake. The custom channels is almost dangerous (especially during working hours!).
Bottom line is, I think the Fiscal Cliff could actually have an uptick bias in advertising sales and will definitely supercharge the listener numbers.
I think this is a massive BUY and strategically HOLD! Cliff or no Cliff!
It convince me, I bought in within pennies of the bottom. Check out YOKU, too.
It popped above $18 after earnings and was smacked all the way down by rumors
which don't impact the YOKU specifically or generally. They raised guidance and are exceptionally undervalued.