We came across this article that emphasizes on how Pandora Media’s (NYSE:P) recent release of June 2012 metrics implies a growth slowdown leading to a decline in the company’s market value.  We wanted to make a a couple of comments here.
Firstly, the slowdown was evident even before Pandora’s last quarterly release when the company reported its March 2012 metrics (for details see Pandora Media Earnings: Slowing Growth And Higher Content Costs In Focus). This is not something new and the market reaction seems to be a bit unwarranted.
Secondly, just the listener hours growth slowing is not something to panic about. Pandora has already covered a vast portion of the U.S. population with over 150 million registered user and the slowdown in growth is a natural consequence of growing from a higher base.
In fact, the slowdown can be a good thing for the company. Pandora has grown at a rapid pace in the mobile segment and the sales of ad inventory on this platform has not kept up with the pace of listener hours growth. As a result, the company has still not managed to become profitable.
Over time as mobile listener hours growth slows, Pandora will continue pushing the sales of its mobile ad inventory and eventually the mobile monetization levels should catch up with current desktop levels
Our price estimate for Pandora Media stands at $7.90, implying a discount of about 20% to the market price.Notes: