Apple Inc.’s announcement Monday that it already has 11
million unique listeners for its new iTunes Radio service appeared to have an
impact on Pandora Media as the leading Internet radio company’s shares slid
almost 11% Monday.
According to Rex Crum at Marketwatch, Pandora’s stock gave
up $2.73 a share, or 10%, to close at $24.26 as investors turned against the
company following Apple’s news about iTunes Radio, which came out prior to the
start of trading.
However, analysts who cover Pandora were mostly surprised at
that reaction to Apple’ iTunes Radio update, which the company made at the same
time it said it sold 9 million iPhone 5C and iPhone 5S phones over the first
three days the new iPhones were on sale.
“All the Apple stuff is pretty old news and should have been
anticipated,” said Michael Pachter, of Wedbush Securities. “People are likely
to check iTunes Radio out, but it is not going to be as good as Pandora for
most, so [the stock decline] should be a transitory impact.”
While Apple’s 11 million active listeners is still a far cry
from the 72.1 million listeners that Pandora reported in August, a figure that
was up 28% from a year ago, Stifel Nicolaus analyst Jordan Rohan said the
immediate impact from iTunes Radio on Pandora hints at large market-share
losses for the company.
Rohan said approximately 50% of Pandora’s users access the
service via one of Apple’s iOS-based devices, and that the data from Apple “enables
us to estimate that Apple’s entry into streaming radio will reduce Pandora’s
current listening hours by 10% to 15% over the coming four to six months.”
In August Pandora reported 1.35 billion listening hours for
the month, up 16% from a year ago.
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