Pandora Media Inc., the Internet radio pioneer, fell the most since it sold shares to the public after the company’s fiscal first-quarter forecast trailed analysts’ estimates.
Pandora, based in Oakland, California, sank 24 percent to $10.91 at 11:49 a.m. in New York trading after its forecast yesterday. The shares dropped as much as 26 percent for the biggest intraday decline since their market debut in June. Before today they had climbed 43 percent this year.
Pandora said yesterday it expects consumer advertising sales in the quarter to be lowest of the year and Laura Martin, an analyst at Needham & Co. in Pasadena, said the company has more mobile advertising inventory than it can sell. She expects marketers to embrace the platform, as about 70 percent of users listen on mobile devices.
“Mobile is putting a lot of pressure on their revenue line,” Martin said yesterday in an interview with Bloomberg television. “Mobile growth will also allow this company to grow at a 100 percent next year,” said Martin, who recommends buying the shares.
Fiscal first-quarter sales will be $72 million to $75 million, Pandora said yesterday in a statement after markets closed. That’s short of the $86.4 million analysts projected. The company sees a loss, excluding items, of 18 cents to 21 cents a share, larger than the 2-cent loss analysts forecast.
Pandora is facing growing sales and programming expenses. The company is accelerating hiring a sales force in the top 10 U.S. radio markets, Chief Executive Officer Joe Kennedy said yesterday on a conference call. Marketing costs rose 46 percent to $21 million in the fourth quarter ended Jan. 31. Programming expenses more than doubled to $48.2 million as the number of listeners rose.
Fourth-quarter sales rose 71 percent to $81.3 million, less than the $83 million average of 14 analysts’ estimates compiled by Bloomberg.
“We were a touch light of the high end of our guidance in terms of holiday ad spending,” Kennedy said in an interview.
The loss widened to $8.17 million, or 5 cents a share, from a loss of $3.91 million, or 31 cents, a year earlier, before the company went public, Pandora said.
Excluding items, Pandora lost 3 cents a share, more than the 2-cent average loss seen by 16 analysts in a Bloomberg survey.
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