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The Oxen Group is a financial analysis and investment opportunities newsletter-based website run by financial analyst David Ristau and features several other traders. Ristau and team have been working in stocks for several years and has developed a knack for identifying winning short-term and... More
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  • The Daily Discourse: Company Profile and Possible IPO - Pandora Radio 0 comments
    Jun 22, 2010 11:45 AM | about stocks: AAPL, MSFT, GOOG

    Many of you have probably used the amazing internet radio website Pandora. If you have not, Pandora is a website, in which users enter into a musical group, artist, or son into a database that plays back songs from the entered artist/song and artists or songs that sound similar to the entered one are played. Users can then provide feedback on whether they "like" or "dislike" a song to help influence future songs. The website is owned by Pandora Media Inc.
     
    Pandora is able to produce similar artists by identifying musical attributes of each song and then selecting songs with similar qualities of other songs. The qualities range from rhythm, tones, harmonies, and instruments. The site features a premium subscription, which allows user to pay to remove ads that play in between songs. The basic user can only use Pandora for 40 hours per month. The software is available on Apple, Android, BlackBerry, WebOS, and Windows Mobile smartphones (basically all of them). The company has 700,000 tracks and over 48,000,000 users.
     
    The company made just under $50 million in revenue in 2009 and is looking to make around $100 million in revenue in 2010. The reason this website is so compelling to me is that they own the entire internet radio network (40% of frequent social networkers use Pandora), and they see 50,000+ new users per day. The company, since its inception in 2000,has nearly died multiple times, and it appeared just last year that the company would never be able to make a profit. Last year, however, the company got a new licensing deal that lets the company pay 8 cents per listen or 25% of revenues, which ever is higher. The company has really profited from its applications on the smartphones, which helped double its subscribers the day it was launched on the iPhone.
     
    Now, the company is starting to turn a profit. They made their first profit in Q4 of 2009. The company is private, so the exact numbers are not out there. Yet, the company said it will be profitable in every quarter of 2010. Further, the company has now hired its first CFO Steve Cakebread, who was the CFO that ledSalesForce.com to their first IPO. This may set the stage for a future Pandora IPO. No date has been set or any major talk, but the company could use to raise more money to help stabilize the company and put more money into spreading internationally and domestically.
     
    Further, the company is definitely a YouTube-like company that one could expect to be bought by a more major corporation as the company begins to show it can be profitable. The likes of Google, Microsoft, and Apple among others could all be enticed by the likes of this website. 
     
    If you have not visited Pandora Radio yet, definitely check it out. 
     
     
    Good Investing,
     
    David Ristau


    Disclosure: None
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