What’s Next for Pandora Media Inc (P)

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Foolish bottom line
There’s a lot to like in this report, in particular, the strong monetization of the mobile segment; but the fundamental business concerns still remain. It’s rare for a stock to jump 20% on a report with an EPS loss that is essentially in line with estimates.

The market’s choosing to focus on the positives, but profitability is ultimately what counts. The pieces seem to be falling in the right place as mobile ad revenue grows, and the company makes more of an effort to juice the advertising market. Its recent integration with STRATA and Mediaocean Media Buying platforms should only help. The systems give advertisers access to Pandora audience ratings, which add value and precision to the ads.

Pandora Media Inc (NYSE:P)’s true advantage in mobile may be its uniqueness as an audio medium. Unlike sites such as Facebook Inc (NASDAQ:FB), for whom a small screen is a disadvantage, Pandora benefits from the ability to appeal to users through their ears on a device that they can take with them anywhere and anytime. Its ability to leverage its mobile users should be the biggest indicator of profitability going forward. I’d also like to see continued strong growth in its subscription base, which indicates that users are willing to pay up for the service. Keep an eye on those two numbers in the future, as they should best determine the music streamer’s success in the short term.

The article What’s Next for Pandora originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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