Liberty or death
Pandora rockets, then plunges 8%
Pandora traded like a Six Flags roller coaster on Thursday, soaring more than 20 percent in early trading — topping out at $13.61 — after the Wall Street Journal reported Liberty Media lobbed a bid to buy it for about $15 per share earlier this year.
But it was to fall 8 percent in extended trading after the streaming-music service reported a secondquarter revenue miss and a decline in listeners.
The decline left the stock at $11.10 per share, after falling 2.8 percent to close at $12.00 in regular trading.
Pandora’s board rejected the bid, which the paper characterized as “a fishing expedition,” on grounds the true value of the service was nearer the $20 per share it commanded last fall.
After the market’s close, Pandora said second-quar- ter revenue increased 20 percent, to $343 million — a gain that fell 2 percent short of the $352 million anticipated by analysts.
Active listeners also disappointed, dropping to 78.1 million at the quarter’s end, compared with 79.4 million a year earlier.
Management said during the call the modest decline in listeners wasn’t a surprise and called user engagement — currently at a record 24 hours per active user per month — a more critical variable.
It also cited progress in payment discussions with the three major record labels but stopped short of providing details.
Pandora’s licensing costs to stream music content ate up 51 percent of the quarter’s revenue. That compares with about 9 percent of revenue that satellite radio pays for its use of recordings, and a royalty-free arrangement enjoyed by terrestrial radio stations.
Pandora launched in 2005 as a free, advertising-supported radio provider that allows listeners to create online stations based on popular artists like Katy Perry.
It expanded in 2009 with Pandora One — an ad-free service for $4.99 a month — that last quarter contributed $55 million in subscription fees.