Shares of Pandora Media (NYSE:P) plunged more than 15% in Wednesday morning trading after the company warned that it would lose money in the current quarter.
Pandora recorded adjusted earnings of 5 cents a share in the third quarter, easily topping the 1 cent per share that Wall Street had expected. The Internet radio company said that quarterly revenue jumped to $120 million, up 60% over last year, and more than the $117 million that analysts had anticipated, the Associated Press noted.
However, the company forecast a loss of between 6 cents and 9 cents a share for the fourth quarter. Wall Street had expected earnings of about 1 cent per share.
The company said that higher spending on infrastructure and the costs of expanding its advertising sales force were partly responsible for the projected loss.
Pandora’s CEO, Joe Kennedy, said that the company had noted increasing caution by advertisers as the U.S. fiscal cliff loomed, with the worst effects expected to occur in January, when higher taxes and federal spending cuts will kick in if Washington cannot reach a budget agreement.
The company is also facing the possible debut of a competing Internet music streaming service from Apple (NASDAQ:AAPL) sometime next year.