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Pandora Media, Inc. Message Board

  • mctr_dangerfield mctr_dangerfield Dec 28, 2012 1:51 PM Flag

    The Pandora Opportunities

    ------------------------- from today's article ---------------------------------------------------------------------------------
    (In the dashboard.)

    .... Pandora shares recently jumped when CEO Joe Kennedy said that some automakers were beginning to put a button on the dashboard interface to make using Pandora as easy as using the AM/FM radio. Right now, only 14% of Internet-radio listeners stream from their car.

    (Local advertising.)

    Advertising is far and away Pandora's major revenue stream. In fiscal 2012, 87% of revenue came from advertising, as opposed to just 13% from subscriptions, yet the company has only just started targeting the local radio ad market. As it becomes more of a mobile service rather than a desktop service, local radio ads will gain more importance as they replace display ad revenue...

    (International.)

    ... there's a bounty of Internet users waiting to be tapped overseas. Pandora could easily double or triple its membership if it is able to successfully penetrate foreign markets.

    (Internet Radio Fairness Act.)

    One of the biggest problems Pandora has faced in its efforts to turn a profit is the high content acquisition costs it's forced to pay. Currently, more than 50% of revenues goes to content acquisition because of high royalty rates. When compared to satellite radio provider Sirius XM, which pays about 8% of revenue to royalties, and terrestrial radio, which pays no royalty rates, the disparity seems blatant and anti-competitive.
    -------------------- end excerpt -------------------------------------------------------------------------------------

    Of these the biggest impact will be from the fairness act, a piece of legislation that Apple will need and Spotify will benefit from as well. When it happens and it will, the king of the subscribers, Pandora, will benefit most.

    It's patented custom approach, will keep subscribers "sticky". It's re-energized business model, will keep shareholders "happy".

    P is a strong buy while basing here in the low 9's.
    md

    Sentiment: Strong Buy

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