Pandora this reported its listener metrics for December. While the total number of active listeners has increased, year-over-year rate of growth continued to decline: from over 30% in July to 13% in December.
According to Seeking Aklpha contributor Andrei Volgin, a growth rate of 13 percent is a respectable number for most companies, but not for the high-flying Internet stock like Pandora.
Investors cheered the news regardless, sending the stock up 15%. They seem to be relieved to see the company survive the debut of iTunes Radio a few months ago. This reaction would have been understandable for a struggling company with its share price at all-time lows, but Pandora is valued at $6.5 billion - 10 times its current revenues, so merely surviving the emergence of a new strong competitor is not enough to justify its valuation.
With the user growth slowing down considerably, and the average hours per listener unchanged for the last two years, it is becoming increasingly clear that any growth in Pandora's revenues may come only from the higher ad rates.
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