Pandora Rocks On, P Stock Hits All-Time High

by Tom Taulli | January 7, 2014 11:15 am

When Apple (AAPL[1]) announced its own streaming music service in September, things looked grim for Pandora (P[2]). But so far, there seems to be little impact, with P stock hitting an all-time high yesterday. (The company went public in June 2011.)

[3]For the most part, there seems to be no stopping to Pandora’s growth ramp. For December, the number of active listeners climbed by 13% to 72.2 million. Oh, and they listened to about 1.58 billion hours of music, which was up 8.6%. When this was announced yesterday, P stock spiked about 14%.

Wall Street’s bears have been betting against the stock, though, with roughly 20% of the float in short positions. That’s certainly on the high end, but it looks like this has led to a “short squeeze,” which is when the bears have little choice but to scramble to buy back shares to cover their positions. As a result, P stock has gained more than 200% in the past year.

P Stock Will Keep Charging Forward

Going forward, there are other encouraging trends for Pandora. Perhaps the most notable is the emergence of the “smart” car — a buzzy topic at this year’s CES conference[4] in Vegas. And yes, Pandora is ideally positioned to benefit from the trend.

The company already has deals with Toyota (TM[5]), Mercedes and Ford (F[6]). In fact, Pandora also announced yesterday that it has signed mega brands, like Yum’s (YUM[7]) Taco Bell, State Farm and BP (BP[8]), for a national in-car advertising campaign. That news (along with the increasing number of listeners) helped boost P stock 20% since Monday.

So if cars ultimately became smartcars — which seems likely — it should mean that Pandora will be able to keep cranking out its growth. In other words, P stock has plenty more room on the upside.

Tom Taulli runs the InvestorPlace blog IPO Playbook[9]. He is also the author of High-Profit IPO Strategies[10], All About Commodities[11] and All About Short Selling[12]. Follow him on Twitter at @ttaulli[13]. As of this writing, he did not hold a position in any of the aforementioned securities.

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