Pandora Media Inc's (NYSE:P) poor showing in the market amidst growing concerns over its ability to compete with emerging music streaming services continues to affect investors’ confidence on the stock. The stock is already down by more than 30% for the year as investors continues to question its long term prospects in the vicious music industry.
Institutional Holding
A point of concern among investors is that Pandora is not generating the desired growth even as the music streaming business continues to experience robust growth. Music industries revenues increased 17% in the first half of 2017 to $4 billion. In contrast, the company lowered its full-year revenue outlook an indication of slowing growth.
Profitability has so far remained elusive even as the broader industry continues to expand. Shrinking of the company’s subscription base to 76 million subscribers is another concern that continues to spook investors.
Institution investors are slowly taking note of the company’s waning prospects if recent regulatory filings are anything to go by. Corvex Management trimmed its stake in the media company to 11.41 million from 20.76 million shares. The hedge fund stake represents a 4.7% stake in Pandora.
Other hedge funds with stakes in Pandora include Matrix Capital Management which owns 23.31 million shares worth $207.93 million. Jana Partners owns 20.20 million shares valued at $180.19 million.
Video Ad Revenue Push
In what is seen as an attempt to strengthen investor confidence, the music streaming service has started to offer Video Plus service to all advertisers. The video service allows nonpaying customers to enjoy some of the perks offered to premium subscribers. However, subscribers must first watch at least 15 seconds of ads to access the features.
The service has so far been praised on the fact that it is designed to attract more ad revenues from advertisers looking to gain music listeners attention. Most of the people watching Video Plus are between the ages of 18 and 34, a target market that advertisers are aggressively looking for.
However, the company’s inability to migrate a good number of ad-supported customers to pay platforms continues to raise concerns.
