Why Pandora Media Inc. Stock Plummeted Friday — The Motley Fool

What occurred

Shares of streaming music firm Pandora Media (NYSE:P) have been slammed on Friday, falling as a lot as 26.eight%. The inventory is down about 24.7% on the time of this writing.

The decline follows the corporate’s third-quarter earnings launch after market shut on Thursday, which included worse-than-expected income and weak steerage for its fourth quarter.

Pandora’s uninspiring outlook for its fourth quarter was most likely the worst information from the report, as income was solely barely under the consensus badyst estimate. Guidance, nonetheless, was dismal. Management stated it anticipated fourth-quarter income to be between $365 million and $380 million. This would symbolize a stunning year-over-year drop in comparison with fourth-quarter income of about $393 million within the year-ago quarter.

A chalkboard sketch of a stock price falling

Image supply: Getty Images.

Notably, as Pandora identified within the fourth-quarter earnings name, after adjusting for Ticketfly and ANZ income, in addition to about $10 million of political promoting income acknowledged within the fourth quarter of 2016, the midpoint of this steerage displays three.three% year-over-year income development. But that is nonetheless notably decrease than the 9% year-over-year income development in Q3 when excluding ticketing.

So what

It is smart that traders are upset in Pandora’s weak outlook for its fourth quarter. Not solely would income between $365 million to $380 million mark a year-over-year hunch in income, however it will be considerably under the consensus badyst estimate for fourth-quarter income of about $412 million.

Now what

To clarify its weak steerage for its fourth quarter, Pandora administration stated it expects difficult market situations to stress promoting income. In addition, it anticipates it’s going to “take some time” to enhance month-to-month energetic person traits and to deal with ad-tech challenges.

“Our Q4 revenue guidance incorporates continued subscription growth offset by a year-over-year reduction in advertising revenue,” administration stated within the third-quarter earnings name.

Daniel Sparks has no place in any of the shares talked about. The Motley Fool owns shares of and recommends Pandora Media. The Motley Fool has a disclosure coverage.

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