In reference to Pandora (P) lately I have heard terms that describe it as ship. A great comparison if you are long Pandora and the ship it is being compared to is strong and running full steam ahead. Unfortunately the ship Pandora is being compared to is The Titanic, and more specifically The Titanic long after it was doomed to sink to the bottom of the ocean.
Take a look at the recent chart here :
Painful to look at. After a disappointing earnings call last quarter, Pandora was slammed from $14 down to around $10. While I suggested buying puts leading into that call, I did not take my own advice and missed out on a 300% gain in one day. That was the painful part to me. I vowed at this point to short Pandora when it crossed the next critical threshold, which had been the $10 level which had been the support level since the IPO.
Friday Pandora sunk under $10 per share, and at Monday's open I entered put positions on the stock. Since then it has been bloody, with Pandora crossing the lower bollinger band and following it down day after day. Even Wednesday, on a day of market recovery, Pandora was one of the few stocks to close in the red now sitting at a 14% decrease in share price over 3 days, or around a 40% decrease since the conference call that started this plummet.
But one has to ask themselves, did the conference call really start this descent, or was it set in motion long ago right at the IPO? Look at the chart from the IPO to now and consider the lines I have drawn.
In my opinion, all the earnings miss did back in early March was accelerate the inevitable. The stock has never traded above its IPO price, and has actually only gained back a fraction of its losses on each "head fake spike" or if you prefer "dead cat bounce" before it plummeted again to the $10 support level. The "writing has been on the wall" for this stock since day one, and as it appears the company will not be producing a profit any time soon, it also appears the stock will be heading south below this $10 mark in rapid fashion.
It has been argued that this company, Pandora, is filled with visionaries and often compared to Sirius XM (SIRI) in an attempt to paint Sirius XM as the dog, and Pandora as the star. Unfortunately for the visionaries, 'reality' here and now is that Pandora is dead weight that should be shed before it drags you down too far into the watery depths.
Sometimes it is best not to be such a visionary looking too far down the road, or else you end up falling in holes and tripping over yourself on the way there. It's a wonderful thing to shoot for the moon, but if in doing so you fall off a cliff to your doom, you will never get there.
Pandora needs help in the form of good news, and it needs it soon, or this stock is heading right down to $5 or less. The S.S. Pandora has just sunk under the waves at $10, and can barely be seen below the surface. Soon it will sink out of sight. Maybe in a few years technology will catch up and bring it up above the waves again?
Until then, feel free to climb aboard my ship, the S.S. Sirius XM, and stay warm and cozy. It holds millions of paying subscribers and is fueled by tanks full of free cash flow, running full steam ahead. We'd love to have you.
Disclosure: I am long SIRI.
Additional disclosure: I am long SIRI April, May and June $2 calls. I am long P April and May $10 puts and June $9 puts.