NEW YORK - Yesterday Pandora's stock was opened for the first time and the stock market rejoiced only to quickly find out it released all evil into the world. Pandora's stock rose over 60% yesterday but finished the day up only 9%. Today it has reversed all those gains and the stock is currently in a free fall. The stock is down 20% on the day as investors rush to the exits.
After the enthusiasm tapered off investors wondered why they exactly were so eager to pay 40 times revenue for a company who may have an impressive algorithm but not an algorithm that is a game changer like Google. Search and trying to find something you want and letting Google find it in millions of pages of documents is much more difficult than a program guessing which song you want to listen to next. Especially because a user can just pick their playlist. Apple already has their "Genius" program which does this. Furthermore the sound quality is akin to listening to music off of You Tube. All Google has to do is create an algorithm that plays shuffle songs off of YouTube.
Is this a $3 to $4 billion idea or just an algorithm that has lost over $100 million over the last decade.
To see the full Pandora Report click here.
You are missing the point of Pandora, which is that you don't have to pick your next song or look for the lastest and greatest song that has hit the market. Pandora is meant to be internet RADIO, much like the FM/AM radio, but personlized. Your comment on why investors were so eager to pay 40 times the revenue is fair, but your lack of understanding what Pandora is about is incredible.
ReplyDeleteStock analyst aren't paid to understand inner workings of the technology behind the company. They are paid to theorize about why they think the ticker is slamming into the red or skyrocketing into the green. They're pretty much amateur financial philosophers.
ReplyDeleteWhatever Pandora offers, the investors aren't buying it.
ReplyDeleteWith the LinkedIn, Pandora IPOs, and Facebook and Groupon to follow, does anyone else feel like we're headed for a another dotcom bubble/crash?