Pandora is a name we discussed on today’s “Talking Numbers” segment on Yahoo Finance. The stock is up 5% today (and up about 30% in the past 7 trading days) after MS upgraded it with the snazzy headline that Pandora is the “Netflix of Radio” going forward.
My view was that if Pandora can indeed maintain its market-leading position in the Internet Radio space, then it has a chance to grow into its valuation. That’s a tall order given the sharks circling around it. Analysts project it to earn around $0.31 in calendar year 2014. In other words, the bulk of the current value for the stock is assigned to its profits 2+ years away. Perhaps many buyers are interested in the stock because of its potential value to an acquirer as an attractive asset to plug into its ecosystem. As a standalone business, it’s a more difficult proposition.
In any case, the technical situation in Pandora is quite interesting. The stock briefly traded above $20 today, the first time the stock has touched that level (in red) since July 2011:
The breach and then pullback today off of $20 makes that level even more important going forward. Interestingly, short interest has hardly declined in the past 6 months, despite the massive rally in the stock:
The elevated short interest (still about 25% of float) continues to represent potential buying in the future. But for now, $20 remains important resistance. This stock is too much of a wild card for me, so I don’t plan to get involved, but interesting setup nonetheless.