Why Did Pandora Pop 20% & Facebook PLUNGE 16.5% This Week?
Although major internet names such as Facebook (NASDAQ:FB) and Zynga (NASDAQ:ZNGA) have been sparking debate recently, another internet company is stealing a section of the spotlight after reporting better-than-expected financial results and succeeding where Facebook is still lagging.
Pandora Media Inc. (NYSE:P), which provides a personalized radio that plays music across several platforms such as traditional desktop computers and Apple Inc. (NASDAQ:AAPL) iPhones, announced first-quarter earnings earlier this week. The company reported that its loss for the quarter widened to $20.2 million, compared to a loss of $6.8 million a year earlier. Even though Pandora reported a greater loss, an adjusted net loss of 9 cents per share beat the mean analyst estimate of a loss of 18 cents per share.
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Unlike Facebook (NASDAQ:FB), which has come under fire for its advertising reliability and momentum, Pandora’s revenue from ads for the first-quarter was a deafening sound for investors. Compared to the same quarter a year earlier, ad revenue surged 62 percent to $70.6 million. Furthermore, mobile and device revenue now represents around 55 percent of total advertising revenue. This is a loud contrast from Facebook’s presence in the mobile ad space. During the social-media giant’s initial public offering roadshow, executives warned that Facebook’s ad business was not keeping up with the dramatic shift to mobile devices.
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Total revenue for Pandora jumped 58 percent year-over-year to almost $81 million, beating the company’s first-quarter guidance by nearly $6 million. “Pandora is off to an excellent start, exceeding our first-quarter outlook and raising our expectations for the full fiscal year,” stated Joe Kennedy, Chairman & CEO of Pandora. “This quarter Pandora averaged more than 50 million active users a month who generated more than 3.09 billion listening hours across Pandora’s (NYSE:P) multiple platforms – desktop, auto, consumer electronics, and mobile devices. Consumers continue to embrace Pandora’s unparalleled personalized radio experience at an extraordinary rate, propelling Pandora’s market leadership to an all-time record share of 5.95 percent of total U.S. radio listening.”
The strong start also paved the way for an improved guidance. For the full year fiscal 2013, Pandora expects total revenue to range from $420 million to $427 million, up from the previous guidance of $410 million to $420 million.
Investors applauded the financial results and higher guidance range as shares closed more than 12 percent higher on Thursday. JMP Securities reiterated its Market Outperform rating on shares and increased its price target from $14 to $16. Meanwhile, Barclay’s (NYSE:BCS) raised its target by one dollar to $9, but kept its Underweight rating. “Pandora is simply too big to ignore,” Stifel Nicolaus analyst Jordan Rohan wrote in a client note, according to Reuters. “We continue to believe that audio is a great advertising medium for mobile devices.”
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