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Pandora Media, Inc. Message Board

  • eyesandears51 eyesandears51 Sep 17, 2013 10:09 AM Flag

    Pandora: S/T Correction, Mid to L/T Growth

    P certainly has been a momentum stock. I like the business model and competitive barriers. The technical’s are beginning to flash caution signals. The fast and slow stochastics are each over 90. A level above 75 suggests an overbought situation. The PEG or ratio of PE to Growth is 15, a level of 2.0 is a stock priced for perfection. Any news hinting less than accelerating growth in revenues, or earnings, can cause the stock to correct from 15%-30% in a heartbeat. 10 Officers. Directors, and insiders selling 2.1 million shares may have anticipated the drop in share price. Please also consider that Crosslink Capital, with 17.1% of the outstanding shares has been an aggressive seller. This puts downward pressure on stock appreciation. Additionally, 28.5% Short as a % of Float in P is also a tell. 10% is frequently the threshold for concern.

    The large secondary announced yesterday has already moved the stock 2.2%-2.5% lower. P is well above it’s $ 18.02-$ 18.16 recent support levels, and could be poised for a larger correction precipitated by shorts, profit taking, Crosslink Capital or other early investor liquidation, or a broader market pullback caused by external events.

    The external environment over the next two weeks is perilous. September 18, the Federal Reserve decides on tapering, next week congress tackles sequester and the extension of US debt limits, and Syria remains a near term wild card.

    In summary, risk adjusted returns favors adding to or acquiring a position closer to the lower $ 18’s, a level that is likely to be tested before the end of September.

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    • Pandora SPO successful......Three factors contributed to the success, as evidenced by a 5.5% increase in share price today on high confirming volume.

      1- Proper pricing that compensated selling shareholders and left room for the buyers to get a pop. Institutions and professional money managers own a very large % of the outstanding shares. With the end of the quarter less than two weeks away, under-performing managers need to bulk up on high beta, momentum stocks like Pandora. A well received SPO gives them confidence to buy more before quarter end. A short squeeze may be in the works, since they may need to cover their positions. Shorts are 27% of the outstanding shares.

      2- Yesterday's unexpected announcement from the Federal Reserve, provided a boost to the broader market.

      3- As previously indicated Pandora has a good business model, competitive barriers, and revenue momentum.

      Expect Wall Street analysts to begin revising estimates higher. The stock could break through $ 30 by YE.

      One word of caution, even the best stocks with momentum and a compelling story can be impacted if external factors, budget authorization, debt extension......#$%$ the market.

    • Agreed, well articulated. I have a question that I can't seem to find the answer to. Have the shares from the SPO been made available yet? I can't seem to find a date when those shares will hit the market. Thanks.

    • Well articulated analysis. Today's pop secondary could be a success until it is completed, followed by a correction in the next two weeks, and smooth sailing in October. I would rather add to positions in the low to mid $ 18's after the froth of the SPO has abated. My view changes if the stock sustainably powers higher over the next two weeks on high confirming volume.

      • 2 Replies to crkenmore
      • The SPO is being well received with the stock up over 2% today. Depending on how the market traverses the Federal Reserve " taper " report today, the budget authorization expiring September 30, and the debt extension, all coming to a head this month, the pop in Pandora Media may be a sucker punch. Pandora's $ 25 share price and nearly 18 PE/G is richly valued, and can not withstand either disappointing company news, or a broader market correction caused by external events.

        The SPO prospectus outline some of the major company specific challenges.......

        “We have incurred significant operating losses in the past and may not be able to generate sufficient revenue to be profitable. Since our inception in 2000, we have incurred significant net operating losses and, as of January 31, 2013, we had an accumulated deficit of $139.6 million. as our number of listener hours increases, the royalties we pay for content acquisition also increase. We have not in the past generated, and may not in the future generate,sufficient revenue from the sale of advertising and subscriptions to offset our expenses.”

        As previously stated I like the companies Medium to Long Term prospects but believe that a combination of a very high valuation, company challenges to overcome, and external factors that may result in a September market correction, the risk/reward at $ 25 plus is not compelling. The recent stock support base of $ 18-$ 18.50 provides a much better balance between risk and potential share price appreciation.

      • LOL!

    • LOL

 
P
26.76+0.09(+0.34%)Sep 19 4:06 PMEDT

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