Stick with Pandora (P) Despite the Noise
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Price: $308.63 +4.84%
Rating Summary:
45 Buy, 29 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 2
Rating Summary:
45 Buy, 29 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 2
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The street is buzzing today following reports of Apple's (Nasdaq: AAPL) foray into the world of online radio, where it hopes to make waves in the world of free user-created internet radio, possibly poisoning Pandora's (Nasdaq: P) watering hole. The competing service would work only on Apple devices and potentially Windows PCs, but not Android devices.
In response to the headlines, analysts at Wedbush are commenting on the developments.
"We believe that creating a free service makes sense for Apple and benefits the record labels due to unparalleled cross-selling opportunities. Due to the dominance of iTunes and the depth of integration with Apple devices, we envision that an Apple Internet radio offering would allow users to purchase and download songs during play on Internet radio virtually instantaneously," said analyst Michael Pachter.
Pachter also said he believes Apple will do a good job integrating the service into its iTunes platform, which would as an added benefit help record labels immensely.
However, amid the massive selloff of shares of Pandora today and the obvious risks to the stock, Wedbush reiterated an Outperform rating on Pandora Media and as well as their price target of $14 since it isn't clear yet how the story will play out.
“We believe Pandora holds certain key competitive advantages that should limit market share losses, at least in the near-term," said Parchter. "Upon the launch of Apple's service. Pandora had ≈ 150 million registered users and ≈ 55 million active users as of July, giving it unrivalled scale among free music service providers and a significant head start over Apple."
"In addition, the presence of Pandora on Android devices should limit the appeal of Apple's service among Android users,” continued Pachter. "In addition, it is unclear whether Apple's iTunes Genius can be successfully adapted for a free music service. While it is true that Apple has significant user data on purchases, it is not clear that the company can mine this data to understand why users buy particular songs. In our view, suggesting a song that the user may want to purchase is a different proposition than suggesting one that the user will want to listen to for free, as Pandora's Music Genome Project already does so well."
Shares of Pandora are down 17 percent to $10.42.
In response to the headlines, analysts at Wedbush are commenting on the developments.
"We believe that creating a free service makes sense for Apple and benefits the record labels due to unparalleled cross-selling opportunities. Due to the dominance of iTunes and the depth of integration with Apple devices, we envision that an Apple Internet radio offering would allow users to purchase and download songs during play on Internet radio virtually instantaneously," said analyst Michael Pachter.
Pachter also said he believes Apple will do a good job integrating the service into its iTunes platform, which would as an added benefit help record labels immensely.
However, amid the massive selloff of shares of Pandora today and the obvious risks to the stock, Wedbush reiterated an Outperform rating on Pandora Media and as well as their price target of $14 since it isn't clear yet how the story will play out.
“We believe Pandora holds certain key competitive advantages that should limit market share losses, at least in the near-term," said Parchter. "Upon the launch of Apple's service. Pandora had ≈ 150 million registered users and ≈ 55 million active users as of July, giving it unrivalled scale among free music service providers and a significant head start over Apple."
"In addition, the presence of Pandora on Android devices should limit the appeal of Apple's service among Android users,” continued Pachter. "In addition, it is unclear whether Apple's iTunes Genius can be successfully adapted for a free music service. While it is true that Apple has significant user data on purchases, it is not clear that the company can mine this data to understand why users buy particular songs. In our view, suggesting a song that the user may want to purchase is a different proposition than suggesting one that the user will want to listen to for free, as Pandora's Music Genome Project already does so well."
Shares of Pandora are down 17 percent to $10.42.
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