Pandora Media (NYSE:P) recently released its business metrics for the month of March 2012.  It appears that although the company is still growing at a strong pace, it has slowed down slightly. Pandora is looking to continue its fast-paced expansion despite increasing competition from Clear Channel Radio and Spotify, which has expanded via Facebook (FB). Could this competition eat up its growth as the year progresses? This is one of the major questions that investors will be pondering as the company releases its quarterly earnings.
If we look at 2011 overall, the company’s total listener hours were close to 8.2 billion, which implies about 680 million average monthly listener hours. This means that listener hours for March 2011 were below average, which suggests that the growth rate for the coming months could be even lower than 88% as it would be compared to a higher base. The active listener growth for March 2012 was also lower compared to that of the full year 2011. Although growth will continue to be very healthy, it is likely to slow as Pandora faces a tougher prior year comparison.
Our price estimate for Pandora stands at $10, implying a discount of about 5% to the market price.Notes: