This week, music streaming platform Pandora Media Inc. (NYSE:P) made its way 10% higher after the company announced a new social media partnership with Snap Inc. (NYSE:SNAP). The deal will allow Snapchat users to share their favorite songs with friends on the app and has been praised as an important step forward for Pandora stock. 

The partnership is a big deal for Pandora stock because it marks the firm’s first big step into social media integration and gives the firm a leg up on competitors with an easy-to-use sharing platform that will direct people to listen through Pandora.

Pandora users can send “song cards” to their contacts which will include both album art and an animated background. Receivers will be able to swipe up on the cards to be taken directly to Pandora in order to listen. 

Playing Catch Up

So far, this is SNAP’s only music streaming partnership- meaning that Pandora’s rivals Spotify Technology SA (NYSE:SPOT) and Apple Inc. (NASDAQ:AAPL) don’t have access to the Snapchat feature. That’s important to the Pandora stock growth story, because the company has lagged behind competitors over the past few years as the streaming space gained momentum. 

The sharing feature will add another draw to Pandora’s premium plans, which require users to pay in order to listen to ad-free, on demand music. Because Pandora has always been best known as a free streaming option, the majority of the company’s users are willing to put up with ads in order to avoid paying subscription fees, but lately the firm has been pushing its paid plans.

Pandora rolled out a Premium Family Plan, that allows up to six people to share an account for just $14.99 per month compared to $9.99 for an individual. This plan is aimed at convincing groups of friends and family to sign up together. The fact that they are all depending on a single plan often leads to higher retention rates, making it a win-win for everyone. 

Pandora certainly didn’t reinvent the wheel there, most big-name subscription services offer similar family plans, but Pandora did try to set itself apart by creating a shared soundtrack for each family group every week. 

Gaining Exposure

However, while the family plan feature is certainly a necessary move for Pandora, it’s unlikely to significantly change the company’s trajectory. The Snapchat deal, on the other hand, could have a profound impact on Pandora’s popularity.

For one, Snapchat has been embraced by the coveted millennial generation and those even younger. That’s good exposure for Pandora, whose service is markedly less well-known than Apple Music, for example.

Although the number of people who are willing to pay for a Pandora account is rising steadily every quarter, overall usage is on the decline. That means the firm will need to step up its marketing efforts in order to lock in more users, and exposure on Snapchat is one way to do this. 

Will it Move the Needle?

So, although Pandora stock saw a lift following news of the Snapchat deal, investors are probably wondering whether the partnership will have a lasting impact on the firm’s share price. While I think the SNAP deal is a necessary step for Pandora, I’m not sure that on its own it will be responsible for a Pandora stock rally. 

The fact that Pandora is finally getting a step ahead of the competition should be a huge vote of confidence for shareholders. Newly minted Pandora CEO Roger Lynch said he would to reignite excitement around Pandora and this partnership deal proves he’s making good on those promises. If nothing else, the SNAP deal underscores the benefit of having Lynch at the helm.

The Bottom Line on Pandora Stock

Pandora will still have to fight for a place in the streaming space against much larger and richer competitors so it’s certainly not a smooth road ahead. However, the company has been making shrewd decisions that will set it up for the future, which should give traders confidence.

All of the pieces that Pandora has been putting in place are likely to add value to Pandora in the future, so if you’ve got time, Pandora Media stock might be a good long-term bet. 

As of this writing, Laura Hoy was long AAPL.