Although the first quarter earnings reporting season is past its peak, there are still several more big companies set to report this week, including Pandora Media today and Electronic Arts and Yelp tomorrow. Also this week, we’re expecting the first public report form Snap and earnings releases from NVIDIA and J C Penney.
Pandora Media earnings preview
Pandora Media is set to report tonight after closing bell, and on average, analysts are expecting losses of 34 cents per share and adjusted EBITDA losses of $73 million in $318 million in revenue.
Modern Day Asset Management
ValueWalk's Raul Panganiban interviews Ross Klein, CFA, and Vince Lorusso. Ross is founder and CIO at Changebridge Capital and Vince is Partner and Portfolio Manager at Changebridge Capital where they manage the CBLS, Changebridge Capital Long/ Short Equity ETF and CBSE, Changebridge Sustainable Equity ETF. The following transcript is computer generated and may contain some Read More
Wedbush analyst Michael Pachter is forecasting a 6.2% year over year decline in listener hours but a 5.3% increase in ad revenue. He believes Pandora Media was “more aggressive” with the frequency of its ads and probably benefited from higher prices during the first quarter. He projects a 2% increase in ticketing revenue and expect the gross margin to plunge to 21.1% from the year-ago quarter’s 30.4%, most as a result of higher costs for content related to subscription revenues.
Wells Fargo analyst Peter Stabler warned that third-party data for Pandora Media from Triton Digital suggested a 3% decline in total listening hours during the first two months of the quarter. He added that if the trend continued into the March, then the company might miss estimates for listener hours. He projects 5.44 million ours, representing a 1.5% year over year decline.
What analysts are watching
The streaming radio service provider launched its ad-free on-demand subscription service called Pandora Premium during the first quarter, so analysts will be watching for any clues on how quickly the company might be to scale that product. Unfortunately, data from comScore suggested that the weakness in January and February did not improve much in March despite the launch of the on-demand service. In addition to Pandora Premium, the company also revealed its partnership with A Million Ads to serve up more personalized ads to its listeners.
Stabler expects investors to also be looking for hints about what activist investors might do to push Pandora Media into considering strategic alternatives. He said some of his firm’s investors have been asking about the five delays in the company’s proxy filing deadline, which is now set for today.
Pandora Media has said it expects to become profitable this year, although this is a topic of debate on Wall Street. Many are concerned about competition in the streaming music industry, which continues to heat up thanks to rivals like Spotify and Apple Music. According to Stabler, Spotify’s new contract with Universal Music is also of concern for some investors.