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Business News Digital
Pandora share price rallies amidst yet more sale speculation
By Chris Cooke | Published on Tuesday 31 May 2016
Pandora’s share price rallied somewhat last week, having previously slumped in the weeks following the departure of former CEO Brian McAndrews back in March and the return of co-founder Tim Westergren to the top job. Though that rally is likely down to new speculation that the personalised radio service could be sold.
As previously reported, a significant shareholder in the digital firm, Corvex Management, recently criticised the reappointment of Westergren to the CEO role, as well as comments he had made to the effect that it was “business as usual” at Pandora Towers. “We urge the company to immediately engage an independent investment bank … to advise on a value maximisation process”, said the hedge fund. That would include considering a sale.
There has been talk of a Pandora being bought and taken back into private ownership for some time, of course, though management there prefer to chatter about plans to diversify the business into fully on-demand streaming and ticketing. Though since the Corvex statement there has been new speculation about possible bidders, with Verizon, Liberty Media and SiriusXM amongst those tipped, albeit without any real substance so far.
Like most streaming services, Pandora is still loss-making despite its massive userbase and $297 million in revenues during its most recent quarter. The company currently relies predominantly on ad sales, and many agree with management that new revenue streams are required to go into profit. Though on-demand streaming isn’t yet profitable either, and ticketing is a sector dominated by a small number of major players.
Which is why, for existing shareholders, a sale is an attractive proposition, though whether any of the mooted bidders would really see a value in acquiring the loss-making concern remains to be seen. Nevertheless, Pandora’s share price reached a three-month high in after hours trading on the back of that sale speculation this weekend, though that share price is still down on where it started the year, and less than a third of the value achieved during a February 2014 peak.
