Investors are closely watching Pandora Media Inc (NYSE:P) after the company posted mixed first quarter results last week, announced a $150 million investment plan and changes in its board. The media company said that the New York-based private equity firm KKR will invest $150 million in it in exchange for new shares of preferred stock. Analysts think that this massive cash infusion would help Pandora Media Inc (NYSE:P) balance sheet and operations. KKR’s managing director and co-head of technology, Richard Sarnoff, will join Pandora’s board, while James M. P. Feuille and technology investor Peter Gotcher will resign from the company’s board.
Pandora Media Inc (NYSE:P) reported an adjusted loss of $0.24 a share on $316 million in revenue, while the Street was expecting $0.34 a share on $318 million in revenue. In the second quarter, Pandora expects $360-375 million in revenue, compared to the estimates of $390.8 million.
Last year, several sources reported that Pandora Media Inc (NYSE:P) was ready to sell itself to the American broadcast company SiriusXM. A statement from the company last week said that the company would evaluate strategic alternatives, including a sale, in the 30 days before the KKR financing is set to close (June 8th).
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Pandora Media Inc (NYSE:P) is finding it difficult to turn a profit amid intense competition. Its active listeners as of the end of the first quarter were 76.7 million, down from 79.4 million in the first quarter of 2016. The company recently launched Pandora Premium, its $9.9 per month service, where users could get on-demand playlists, tracks and videos. Pandora launched this service to compete with competitors like Apple, Spotify and Amazon. About half a million users signed up for a trial of Pandora Premium service over a short period of only 8 weeks. However, Pandora is very late in the on-demand, subscription-based media market. Spotify by now has 50 million paying subscribers. It will take a lot of effort and time for Pandora to make a difference. The company also rebranded its famous Pandora One service, which offers ad-free listening and unlimited skips. Pandora Media Inc (NYSE:P) One service is now called Pandora Plus. The company added several new features in this services. The response was good. Pandora Plus added 375,000 net new paid subscriptions in December 2016.
Last week, billionaire investor Steven A. Cohen’s Point72 Asset Management acquired 5.4% passive stake in Pandora Media Inc (NYSE:P). The investor amassed over 12.55 million shares of the company. The stock gained value on the back of this news.
Pandora Media Inc (NYSE:P) is also streamlining its business and cutting costs. In January, the company announced the they will lay off a whopping 7% of its total workforce (2,000). The stock has lost about 71% since a 2014 high of $37.
Last week, Goldman Sachs raised its price target on Pandora Media Inc (NYSE:P) stock to $18 from $16 and reiterated a “Buy” rating. Similarly, Stifel analyst John Egbert said in a report after the first quarter results that Pandora Media Inc (NYSE:P) is on a path towards stability. The analyst has a “Buy” rating on the stock.