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.