Pandora’s Apple-Led Slaughter Continues

Pandora (NYSE:P) may be adding users, but its share price has not stopped falling since news came that Apple (NASDAQ:AAPL) was working on creating a rival service to the online radio. On Monday, Pandora announced more users had listened to the radio on its site and on mobile devices, but the company’s shares fell as investors worried about rising royalty costs. More users mean higher royalty fees for the company, because it has to pay media owners every time a song is played by a user.

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The Internet radio operator said it had 56.2 million active listeners at the end of August, a 48 percent increase year-on-year and a 4.4 percent increase from the end of July. A total of 1.16 billion listener hours were recorded, which is up 70 percent from a year ago.

Shares fell 4.68 percent to $9.98 on Monday afternoon. They had already fallen a big 17 percent on Friday after news that Apple was working on creating a custom radio service for iTunes users.

“The stock being down today is a little more momentum from Friday,” Albert Fried & Co. analyst Rich Tullo told MarketWatch. Tullo said investors should value active listeners, as that is what determines the company’s advertising inventory and eventually its revenue.

Pandora (NYSE:P) bounced back at the end of the day to close up 8 cents at $9.91 per share.

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