Pandora (P) has struggled over the past year. Year over year, the stock is currently down more than 50%. While tons of experts have weighed in on the cause of the fall, the overall opinion seems to be that Pandora (P) is a victim of its own success (click here to read more on what I mean by that). Nonetheless, Monday morning, the company’s stock was on a strong uptrend. So, today we’ll talk about why Pandora’s stock is trending upward today, whether or not the trend is likely to last on a long term scale, and we’ll talk a bit about the competition in the streaming music space. So, let’s get right to it.
What Seems To Be The Cause Of The Pandora (P) Stock Uptrend?
While there’s no clear way to say “this is exactly and solely the cause of the uptrend” In any case in the stock market. In this case, the brunt of the cause seems to be clear. Here’s what’s going on…
- Repairing Relationships In Music – Pandora’s sole business is music. With that in mind, the biggest problem that Pandora (P) can face is a problem with the musicians creating the media they stream. Unfortunately, that’s exactly what’s been going on. In an attempt to increase profits, Pandora (P) has really gotten under the skin of many musicians by slashing royalties; essentially belittling their talents. However, it seems as though the company is making moves to make the players in the music world happy. The company is now testing a messaging system that will allow artists to record messages to fans that promote albums, appearances, tours, or even just say thank you; and musicians seem to like the idea.
- Pandora (P) Is Huge! – OK, so this is nothing new, but I still think it’s important to mention. The reality is that the online streaming space is incredibly crowded. However, since their entry in the market, Pandora (P) has pretty much dominated every step of the way. As a matter of fact, 31% of United States consumers ages 12 and older listen to Pandora (P) at least on a monthly basis.
- A Shift In The Way Consumer Digest Media – The media industry is clearly changing. These days, more and more people are gaining access to media online than ever before. While the radio still dominates the music ad space as it is, we’re seeing major changes in the space. Income from online streaming ads on online streaming radios are starting to take a larger and larger piece of the pie. With Pandora (P) taking the lion’s share of the streaming radio audience, it only makes sense that the stock has hit the floor and investors are now investing in industry growth; rather than just investing on faith in Pandora (P).
Is The Uptrend Likely To Last?
Yes! Pandora (P) is a great company and their stock has been falling for more than a year now. Believe it or not, in my opinion, it’s one of the few stocks that are currently under-valued in the market. With that said, as the online streaming radio industry continues to grow and Pandora (P) continues to take the lion’s share of the audience, the company’s stock has no where to go, but up!
The Biggest Hurdle For Pandora (P) Now
It’s obvious that consumers use online streaming radio and that Pandora (P) is the current leader. In fact, I’m currently listening to Pandora (P) radio as I write! However, now that the company is working to make artists happy, the next big hurdle is going to be competition. With big players like Youtube (GOOG) and Spotify (SPTF) in the market, Pandora (P) is no longer the only giant; and I’d imagine they’re going to have to think incredibly hard about building a strategy to maintain their market share.
What Are Your Thoughts?
Are we seeing a long-term uptrend in the making or just a blip on the chart? Why do you think that? Let me know in the comments below!