by Tom Taulli | January 7, 2014 11:15 am
When Apple (AAPL) announced its own streaming music service in September, things looked grim for Pandora (P). 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.)
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.
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 in Vegas. And yes, Pandora is ideally positioned to benefit from the trend.
The company already has deals with Toyota (TM), Mercedes and Ford (F). In fact, Pandora also announced yesterday that it has signed mega brands, like Yum’s (YUM) Taco Bell, State Farm and BP (BP), 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. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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