4 Questions for Pandora Media Inc (P)

Pandora has bragging rights in there somewhere, but it’s still not flattering for a company that’s struggling to turn a profit to rely more and more on online advertising. The market’s clearly rewarding the online subscription leaders. Pandora would love a piece of that.

Subscriptions bring consistency, especially if retention rates are high. Sirius XM relies on advertising for a sliver of its revenue, and Netflix doesn’t bother with wooing marketers. It would be a great sign of progress if Pandora can get subscriber revenue growth to outpace its bread-and-butter ads business.

4. Will guidance for the new fiscal year meet or exceed estimates?
Pandora should initiate its guidance for fiscal 2014 — which began last month — on Thursday. It should also offer up a more accurate glimpse of how its current quarter is playing out.

Wall Street’s eyeing a small loss on a 41% surge in revenue, but it wouldn’t be a surprise if Pandora came in light on both fronts.

The move to cap mobile usage for free accounts suggests that profitability may be a problem, and the recent sequential weakness may spill over into soft top-line guidance — at least for the fiscal first quarter.

Pandora has a lot to prove. At the very least it has to show that it’s worthy of the nearly 70% rally since November’s bottom.

Stream deeper into Pandora Media Inc (NYSE:P)
Pandora has won millions of devotees among music fans but few supporters on Wall Street. The online jukebox seems to be redefining the way we consume music, a transformation that’s only likely to grow. But high royalty rates and competition from all corners threatens to silence the company. Can Pandora translate success with its listeners into a prosperous business model that will deliver for investors?

The article 4 Questions for Pandora originally appeared on Fool.com and is written by Rick Aristotle Munarriz.

Longtime Fool contributor Rick Aristotle Munarriz owns shares of Netflix. The Motley Fool recommends Apple and Netflix. The Motley Fool owns shares of Apple and Netflix.

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