Tuesday, September 24, 2013

Report: Pandora ‘Thumped’ By iTunes Radio

Apple Inc.’s announcement Monday that it already has 11 million unique listeners for its new iTunes Radio service appeared to have an impact on Pandora Media as the leading Internet radio company’s shares slid almost 11% Monday.

According to Rex Crum at Marketwatch, Pandora’s stock gave up $2.73 a share, or 10%, to close at $24.26 as investors turned against the company following Apple’s news about iTunes Radio, which came out prior to the start of trading.

However, analysts who cover Pandora were mostly surprised at that reaction to Apple’ iTunes Radio update, which the company made at the same time it said it sold 9 million iPhone 5C and iPhone 5S phones over the first three days the new iPhones were on sale.

“All the Apple stuff is pretty old news and should have been anticipated,” said Michael Pachter, of Wedbush Securities. “People are likely to check iTunes Radio out, but it is not going to be as good as Pandora for most, so [the stock decline] should be a transitory impact.”

While Apple’s 11 million active listeners is still a far cry from the 72.1 million listeners that Pandora reported in August, a figure that was up 28% from a year ago, Stifel Nicolaus analyst Jordan Rohan said the immediate impact from iTunes Radio on Pandora hints at large market-share losses for the company.

Rohan said approximately 50% of Pandora’s users access the service via one of Apple’s iOS-based devices, and that the data from Apple “enables us to estimate that Apple’s entry into streaming radio will reduce Pandora’s current listening hours by 10% to 15% over the coming four to six months.”

In August Pandora reported 1.35 billion listening hours for the month, up 16% from a year ago.

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