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Sad song: Pandora can't hold onto early gains

May 24, 2013: 4:01 PM ET
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Pandora's sales are up big despite a lot of competition in streaming music. But many investors are still skeptical.

Streaming radio service Pandora may face a lot of competition. But the company is still attracting subscribers ... and advertisers.

Pandora (P) reported a quarterly loss Thursday after the bell. But sales topped forecasts thanks to an increase of 700,000 new listeners from a year ago. The stock rose as much as 13% in early trading Friday and hit a new 52-week high in the process. Although things didn't end too well for Pandora ... more about that later.

Still, on a day where there was a surprising (for a pre-holiday weekend Friday) amount of interesting corporate news -- Procter & Gamble's (PG) Ackman-inspired CEO shuffle, Abercrombie & Fitch's (ANF) huge sales miss, more turmoil at Sears (SHLD) and a cloudy outlook from Salesforce.com (CRM) to name a few -- Pandora was one of the top trending tickers on StockTwits for most of the day.

a_jackson
$P Revenues finally outgrew content acquisition costs >> Pricing structure is improving. Do we have ourselves a real business? Bullish

Pandora is growing up. But the company will still need to show consistent profitability before the many skeptics are willing to declare that Pandora does have a legitimate future.

Some felt that the main reason for Pandora's pop wasn't really a reflection of true excitement about the fundamentals. It was simply a short squeeze. But of course, you can still profit when the shorts are covering. So some traders were not complaining.

TannorrP
$P this has a bag of shorts, don't under estimate the momo

upsidetrader
I still like Grooveshark, but $P going to 20+, (late adopter) folks are short http://stks.co/eVbM Bullish

Good point. I like Grooveshark too. And Spotify. And Songza. It is impressive that Pandora continues to grow considering that Google (GOOG) and Twitter are also now in the streaming music business. And there are still rumors that Apple (AAPL) may eventually launch some sort of radio service.

But not everyone is so optimistic. The stock actually fell as the day wore on and wound up finishing down more than 4%.

CandyCoated
$P Hope this hits $20+ tomorrow. Then I'll short this fat pig.

It got close (but no cigar) to $20. The new 52-week high is $19.37. So I guess some shorts figured it was still worth targeting again at $19.

One trader pointed out that Pandora may not be able to survive as a standalone business.

MicroFundy
$P - unless folded into a larger co' $AMZN/$GOOG/$MSFT etc - & unless they work out a deal (via congress) w label co's is unsustainable.

Good point. There have been many takeover rumors regarding Pandora for the past year or so. But it looks like the company wants to remain independent ... even though it may in fact need help from lawmakers in order to lower royalties it pays to the big music companies.

Still, one trader joked that he wished he owned Pandora, as well as other companies he uses all the time ... the old Peter Lynch model of buying what you know.

sspencer_smb
if only i were long the stuff i use on a daily basis-- $NFLX $GOOG $P $SODA $GMCR $TSLA (kidding)

Ha. If you were long the first five stocks, you could easily afford to shell out $87,400 for Tesla's (TSLA) top of the line Model S Performance.

Anyway, one of those six stocks that Mr. Spencer mentioned, Google, is starting to pull back from its all-time highs. That led me to wonder aloud on Twitter if Google might be following the unfortunate lead of Apple, which is still way off last year's all-time high.

One follower said he may have an answer for me. And that won him the coveted (humor me) Reader Comment of the Week award!

Ha. While you're at it, ask Siri about where Apple's stock will finish the year. Although you might want to also ask Glass if it's possible for you (or anyone for that matter) to not look like a complete dork wearing it!

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Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

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