Steadfast Hopes For Something Good in Pandora’s Box

We’ve also recorded a number of insider sales at Pandora in November and December. While insider sales often make sense for diversification purposes, they are still important to note. Finally, quite a bit of Pandora’s business prospects depend on its relationship with Apple Inc. (NASDAQ:AAPL), which has the potential to develop and operate its own streaming radio service. Read our latest coverage on Pandora’s relationship with Apple. That sounds a bit risky to us.

We would compare Pandora to Sirius XM Radio Inc (NASDAQ:SIRI). Sirius is profitable, but struggling as its earnings have been down substantially recently. Net income is also expected to fall in 2013, but the market apparently expects the company to improve from that point as the forward P/E is 28. We don’t think that this stock is that high a priority to research further either- it seems that there’s quite a bit of volatility and uncertainty when it comes to Sirius’s numbers.

Pandora doesn’t seem like a good stock to buy, even after its recent decline. The company is dependent on strong sustained growth, given that it’s only barely profitable after a high revenue growth rate over the last year, but also dependent on that growth not attracting competition. That sounds like a very narrow window for success, and it’s probably better to skip this opportunity.