Pandora Is a No-Brainer — Buy P Stock Now!

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Pandora Media, Inc. (NYSE:P) is rallying more than 4% higher today after its quarterly earnings beat analysts’ expectations and the music streaming company reported a surge in users.

P Stock: Pandora Earnings Results Presents Buying Opportunity Under $20Pandora reported a loss of 12 cents per share for the quarter, but that was 4 cents better than analysts had predicted. Revenue was up 28% year over year to $230.8 million, also beating analysts’ estimates of $224.6 million.

But perhaps more importantly for P stock was the 11% year-over-year jump in listening users, reaching 5.3 billion hours of music on the service. The company said first-quarter active listeners grew 79.2 million, up from 75.3 million from the same quarter a year ago.

And based on its business outlook, Pandora doesn’t see any signs of slowing down.

The company said it expects second-quarter revenue of $280 million to $285 million, compared to analysts’ estimates of $280.3 million. And for the full year, Pandora expects revenue of $1.16 billion to $1.18 billion, against analysts’ estimates of $1.16 billion.

P Stock: The Competitive Landscape

Music streaming is the future of music. CDs are dead. And that premium headphone maker Beats was picked off last year for $3 billion by Apple Inc. (NASDAQ:AAPL) underscores the inevitable demise of music downloads.

With cloud space galore, there’s no point of it. Want more proof? Rapper Jay-Z last month shelled out $54 million to acquire Swedish music-streaming company Aspiro.

Competition has been the biggest obstacle to P stock, and this quarter was no exception. Aside from Apple, Amazon.com Inc. (NASDAQ:AMZN) is now a threat with its Prime Audio service. And, of course, there’s satellite radio provider Sirius XM Holdings (NASDAQ:SIRI).

Still, Pandora remains and its numbers suggests growth is still on the rise. It’s tough to see how Pandora — a (or the) pioneer of music streaming — will be left out in a thriving music streaming industry.

With P stock still down some 40% from its 52-week high of $30.48, that should be music to the ears to investors/traders who understand what’s about to happen to the music streaming industry. Need further evidence? Spotify earlier this month raised $400 million, putting its valuation at $8.4 billion, more than twice Pandora’s market cap, which sits at around $3.5 billion.

Investors should salivate at how cheap P stock has become.

Sure, P stock has languished in bearish territory since last October when it first fell below $20. But P stock has also been resilient at around $14 per share, reaching its 52-week low of $14.50 on March 11. And since then the stock has surged 24%, including 4% gains Friday.

Despite the tepid numbers in Pandora earnings, discussion about music streaming can’t take place without the mention Pandora as a leader. And that term “leader” will always factor in P stock.

P Stock Is a Buy

P stock a no-brainer — not only as a play on the music streaming industry, but the platform Pandora has built can put a company like Microsoft Corporation (NASDAQ:MSFT) on the level of Google Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) and Facebook, Inc. (NASDAQ:FB) in terms of mobile ad relevance.

To that end, constant rambling about Pandora earnings and the perceived decline in its streaming status ignores the true potential of the Pandora stock price. Moreover, with P stock having remained under pressure for over a year, Pandora will remain a logical takeout target at levels under $20. It makes sense given Spotify now commands a valuation twice has high.

Assuming Pandora commanded a similar valuation, the stock would be around $44 per share today, or just shy of its March 2014 high.

Those are numbers that should make any investor of P stock happy.

As of this writing, Richard Saintvilus held shares of AAPL.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/04/pandora-is-a-no-brainer-buy-p-stock-now/.

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