Pandora Q2: Strong Revenue Growth Tempered By Cost Concerns
Pandora’s (NYSE:P) reported its Q2 fiscal 2012 earnings Thursday. While revenue growth was impressive driven by continuous increase in mobile users, growing content costs are a concern. Content acquisition forms the majority of Pandora’s costs. Such costs may be a growing sore spot as the company ramps up its content inventory to better compete with players like SiriusXM (NYSE:SIRI) in the automobile market and Spotify, which recently launched its music service in the U.S. via Facebook. Our price estimate for Pandora is about $10, which is around 25% below the current market price. However, we should highlight that our per share valuation of Pandora is significantly impacted by estimated employee stock option dilution. Based on Pandora’s basic share count only, our Pandora valuation would be closer to about $12 per share.
Pandora’s Revenue Growth Solid; Driven by Mobile Use
Pandora saw revenue growth of 117% compared to Q2 of lastComplete Story »