By Barbara Grady
One of Wall Street’s hottest plays and most active stocks in recent days is Oakland’s very own Pandora Media Inc., which trades under the symbol P on the New York Stock Exchange.
The Internet radio company’s stock price – up 4 percent today – soared late last week then plummeted Monday and then began to climb up again Tuesday and today.
Wednesday it traded heavily and closed at $24.45 a share, up 98 cents or 4 percent for the day.
Lots has been happening at Oakland’s premiere technology company, which streams customized music selections to 72 million users – and lots happening in its market of Internet radio as well – most notably Apple Inc.’s introduction of iTunes Radio, seen as a competing service to Pandora’s.
Pandora stocks’s zig-zag ride of the last week began Thursday with an announcement of a U.S. District Court ruling in New York in Pandora’s favor by enjoining members of the American Society of Composers, Authors and Publishers Music from charging royalty fees outside of a consent decree royalties structure set by the Society. Pandora spends more than half of its revenues on royalty fees – 58 percent of revenues for the first six months of this year – and the company expected the ruling to slightly reduce those costs.
That same day, Pandora also expanded a stock offering – making 3 million more shares available in an offering that had been 10 million share – amid strong demand for the stock.
Thursday’s price for Pandora stock soared to an all time high of $27.50 a share and closed at $27.35 a share, up 6.7 percent, on such huge volume that it was one of the 10 most active stocks of the day.
Helping investor confidence, analysts said, Pandora’s newly appointed Chief Executive Officer Brian McAndrews, began his post last week.
All seemed good for Pandora. The stock price had nearly tripled for the year.
Then on Monday, Apple Inc. announced that 11 million people had tuned into its new iTunes Radio service in the four days since the service launched. Analysts questioned Pandora’s ability to withstand the competition from Apple and iTunes Radio.
Pandora shares fell more than 10 percent Monday losing $2.73 a share to close at $24.26 a share.
Then, to continue the drama, Pandora Founder and Chief Strategy Officer Tim Westergren on Tuesday told a prestigious investor conference being put on by Goldman Sachs that Apple’s iTunes radio would have a “modest” impact on Pandora’s market share. He said that Pandora has 72 million users and about half of them use it on Apple devices and meanwhile Pandora’s service is embedded in workstation computers, cars, refrigerators and other electronics.
Investors liked that and the stock started recovering Tuesday.
Then today it shot up to a high of $25.80 a share and then settled a little to finish at $25.45 share, up 98 cents, after Pandora executives gave a presentation at a conference held by the Telsey Advisory Group.
According to The Street, an online investment letter, ten analysts rate Pandora a “buy” and six rate it a “hold.” and none rate it a sell. According to Thomson/First Call, analysts put a median price target of $24 a share on the stock.
According to analyst Michael Pachter of Wedbush Securities writing on Wall Street Cheat Sheet, Pandora’s stated plan to grow advertising revenues will be helped by McAndrews’ background in digital advertising. He is the former head of Microsoft’s advertising.