Music streaming service, Pandora Media, Inc P has often been seen as a potential buyout target. Last week, new buyout rumors coupled with expansion of the company’s board proved to be great news for the stock, which closed 10% higher on Thursday.
Last Wednesday, Pandora announced the addition of Anthony J. Vinciquerra, a media industry veteran with over thirty of experience to its board, thereby expanding the number of board members to 10. Vinciquerra has been serving private-equity firm Texas Pacific Group since 2011 as a senior advisor and was the chairman and CEO of Fox Networks Group prior to that.
Pandora CEO Brain McAndrews said, “We’re delighted to welcome Tony to our Board. His extensive experience and insights will greatly benefit Pandora.”
An analyst has linked Vinciquerra’s addition as providing “a little credence” to the ongoing buyout speculations. However, other analysts labeled it as a part of the company’s long-term strategy to take it on the path of profitability.
Pandora hasn’t had a great beginning to 2016 on the trading front. The stock has lost as much as 19% before Thursday’s gain. Pandora has been seeing a slowdown in its subscriber base owing to the aggressive marketing strategy of Apple Inc.’s AAPL Apple Music and competition from other players like Spotify and Amazon AMZN Music. Moreover, a 15% hike in royalty rates will lead to increase in already high content costs.
To combat odds, Pandora has been trying to do a lot of things at the same time, leaving the investor community jittery. Pandora has been overhauling its operations to provide all of “radio, on-demand and live music” on its own platform. As part of the strategy, Pandora acquired companies like Next Big Sound, Rdio and Ticketfly. In addition, it is cutting deals to reduce dependence on CRB rates and better manage its content costs. Apart from Atlas Music, in December, Pandora signed multiyear licensing agreements with ASCAP and BMI, the eminent Performance Rights Organizations, Downtown Music Label, a leading rights management firm and Warner/Chappell Music.
Recently, Pandora added another interesting feature to its Artist Marketing Platform (AMP) called AMPcast. This new feature will allow artists to send instant messages to a select group of fans. This could be an interesting monetization tool for Pandora.
Considering the risks involved in pursuing so many new products at once and also the tedious task of integrating the acquired companies, we can hardly blame investors.
Currently, Pandora carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space is Etsy, Inc. ETSY, which sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment