Groupon Inc (GRPN), Pandora Media Inc (P): One Stock to Buy, One to Avoid

iTunes Radio

Apple Inc. (NASDAQ:AAPL)’s announcement of iRadio streaming service seems scary for Pandora. Pandora currently has 70 million active monthly listeners. Apple Inc. (NASDAQ:AAPL) announced its plans to launch an internet radio named iTunes radio, which will feature more than 200 stations and will come built into iPad and the iPhone. Pandora has one advantage as its app is available on Android, iOS and on Windows Phones, while Apple radio runs on iOS devices only. An internet radio service has room to grow due to increased usage of tablets and smartphones. Currently, Apple Inc. (NASDAQ:AAPL) will have more effect on Pandora’s business compared to Sirius XM Radio Inc (NASDAQ:SIRI).

Sirius XM is expected to be threatened by iTunes radio in the long run. Sirius XM Radio Inc (NASDAQ:SIRI) drives significant business from car radio subscriptions, and Apple could affect its car radio business as it will have iOS voice integration by 2014 in cars. Apple announced at the Worldwide Developer’s Conference that they will be integrating iOS in a number of automobiles from around the world. Honda, Mercedes-Benz, Kia, Hyundai, Jaguar, Opel, Acura, Volvo, Nissan and Ferrari cars will be the first in this list.

Conclusion

Groupon Inc (NASDAQ:GRPN)’s new pull strategy and the emphasis placed on mobile usage for customer convenience are the key drivers of the company’s growth. The growth in the US market is solid, but it needs to improve its smartphone offering for international users.

Pandora Media Inc (NYSE:P)’s revenue is expected to rise this quarter, but it needs to rethink its business model and start performing on the bottom line or investors will lose confidence in the company.

Sirius XM is also under pressure due to a dwindling market and risks from the announcement by Apple. Therefore, growth in Pandora and Sirius XM stock seems improbable in the current circumstances. Therefore, I believe investors should buy Groupon Inc (NASDAQ:GRPN), but avoid Pandora and Sirius XM.

The article 1 Stock to Buy, 1 to Avoid originally appeared on Fool.com and is written by Red Chip.

Red Chip has no position in any stocks mentioned. The Motley Fool recommends Pandora Media. Red is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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