Yesterda,y Pandora’s (NYSE:P) shares fell by nearly 12% to $8.20, getting close to its 52-week low of $7.38. According to a report from Bloomberg, tech giant Apple (NASDAQ:AAPL) plans to launch an Internet radio service during the first quarter of 2013.
Right now, the company is in discussions with the major recording labels. Unsurprisingly, the big hang-up is over the sharing of the ad revenue — but Apple should be able to get a deal done.
Rather, the big issue is likely to be the service itself. Let’s face it: Apple has been a bit of a spotty lately with its apps, as seen with the mapping app and Siri.
Apple Radio may be different, though. After all, the company has a long track record with music. Plus, the iCloud service already has over 190 million users after launching only a year or so ago. There are also more than 400 million iTunes customers.
In other words, Apple has a tremendous amount of leverage so, yes, this certainly should be scary for shareholders of Pandora.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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