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Pandora plunges on Apple radio reports

September 7, 2012: 12:12 PM ET

Click chart for more on Pandora's stock

If you have an Elton John channel on Pandora (P), an appropriate song to be streamed today would be Sad Songs (Say So Much). "Guess there are times when we all need to share a little pain."

Shares of Pandora plunged more than 17% Friday following multiple reports that Apple (AAPL) was looking to launch its own streaming radio service. Fortune's Apple 2.0 blogger Philip Elmer-DeWitt has more on the radio rumors. (See "Apple could buy 60 Pandoras") But traders on StockTwits were debating whether the sell-off was justified or if Pandora really is doomed.

reformedbroker:  I might buy some Pandora ($P) on this $AAPL competition sell-off. And I think $GOOG should buy the whole company if they're smart.

TodayTrader: This reaction in $P to possible competition with $AAPL might be overdone here.

It's true that the sell-off may be a bit extreme considering that Apple has not officially announced any plans to start an iTunes radio product as of yet. And Pandora could easily be taken over by Google (GOOG) or any other tech giant that might be interested. The company's market value is just $1.7 billion. Pocket change for Google and other cash-rich techs like Apple, Microsoft (MSFT) and heck, even Facebook (FB).

Speaking of Facebook, one thing that Pandora has going for it is that it is so far doing a better job of generating ad revenue from mobile than "The Social Network." According to a report from eMarketer Thursday, Pandora is expected to generate $226 million in mobile ad sales in the United States this year. That puts Pandora ahead of Apple, Facebook and Twitter. What's more, eMarketer is predicting that Pandora's U.S. mobile ad revenue will jump more than 50% next year to nearly $350 million.

Related: Twitter tops Facebook in mobile ad sales

Still, there are many reasons to be skeptical of Pandora. Friday's big sell-off follows a huge spike in the past week after the company reported it broke even in its most recent quarter. Analysts were expecting a loss.

So with the stock up as much as it had been heading into Friday, it may be logical for the shares to give back most of those gains on renewed concerns about competition.

MarkSanchez: $AAPL can afford to experiment with audio advertising, $P can not, P's absurd and unfounded 5 day rally has placed it on a mountain top

Very true. By the way, you are not THE Mark Sanchez of the New York Jets are you? He seems like a nice guy. I interviewed him last year. And I know that Pimco CEO Mohamed El-Erian will be cheering for you. So if you are the playcaller for Gang Green, please hand off to Shonn Greene early and often Sunday. He's on my fantasy football team. (Although Mrs. Buzz, a die-hard Bills fan, probably won't be thrilled to hear me rooting for the Jets.)

ldrogen: Pandora $P has never and will never have a real profitable business, and it was never defensible either, Songza now Apple $AAPL

TraderLantern:  As if the competition from Spotify wasn't enough, $P now has to deal with $AAPL.

That's a great point. Competition in this sector is brutal. And Pandora is not so much better than the rest that it can remain the leader indefinitely. In fact, I have apps for Pandora, Spotify and Songza on my iPhome. But I uses Spotify and Songza far more often than Pandora. I also have apps for individual terrestrial radio stations around the country that I happen to like. There is little that's unique about Pandora -- even if Apple never enters the market.

Finally, my Reader Comment of the Week. It involves another Pimco reference. I was lamenting the Giants' loss to the Cowboys over on Twitter Thursday morning. That game was on NBC ... and it prompted this amusing comment from a reader.

I'd pay to see Bill Gross in a sitcom. Maybe he could play a friend of Ed O'Neill's character on "Modern Family" -- aka the show that "The New Normal" appears to be a painful rip-off of.

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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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