Pandora Media Shares Plunge 23% After Company Misses Targets
Shares of Pandora Media (NYSE: P) were down nearly 24% shortly after the market opened on Wednesday morning because the company released disappointing earnings and guidance numbers on Tuesday after the stock market closed.
Pandora Media reported a wider than expected fourth quarter fiscal 2012 adjusted loss of 3 cents per share, compared to the Wall Street consensus forecast of a loss of 2 cents per share. Although revenue jumped 71% higher than a year earlier, the Internet radio service company still managed to disappoint Wall Street with a reported $81.3 million in revenue, compared to the $83 million in revenue that Wall Street had expected.
The bad news kept coming from Pandora Media, with the company saying that it expected to lose between 18 and 21 cents per share on revenue of $72 million to $75 million during the company's first quarter. The company's guidance was much worse than the loss of 2 cents per share on revenue of $86.4 million that Wall Street was expecting for the current quarter.
Pandora Media did have some good news for shareholders that are more concerned with long term growth than quarter to quarter results. The company said that its total listener hours doubled for the the fourth quarter, skyrocketing to 2.7 billion hours, up from 1.3 billion hours during the same quarter a year earlier. Advertising revenue also showed substantial improvement, climbing 74% to $72.1 million from a year earlier, while subscription and other revenue rose 51% to $9.2 million.
Pandora Media Chairman & Chief Executive Officer Joe Kennedy tried to put a positive spin on Tuesday's earnings report when he said that "the fourth quarter was a strong finish to fiscal 2012, which was highlighted by record revenue, radio market share, listening hours and active users."
Kennedy went on to say that "reflecting on our first fiscal year as a public company, we have many accomplishments to be proud of and much to look forward to in the year ahead. Pandora continues to rapidly disrupt the radio industry and has only just begun to realize the potential of our $37 billion U.S. market opportunity."
Despite Pandora Media's stellar growth, there's still much cause for concern regarding this company. Pandora Media's stock fell so far because despite the company's rapid growth, it's not growing as fast as expected and it still hasn't proven that its business model will ever be profitable. As it stands, the more revenue the company brings in, the more money it seems to lose.
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