Pandora Losing 10-15% Of Listening Hours To iTunes Radio

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Pandora Media Inc (NYSE:P) is facing its most profound competitor for the first time this week. Apple Inc. (NASDAQ:AAPL) launched iTunes Radio last week with the release of iOS 7. That gives millions of people access to music streaming similar to the service offered by Pandora when they boot up their first iPhone.


A new report on the competition arrived yesterday from Stifel. The report estimates that Pandora will lose 10-15% of its listening hours, a key metric, over the next four to six months. The threat, according to the Stifel analysts, is not existential. It does, however, support the Hold rating on stock in the streaming company.

Pandora facing off with iTunes

Pandora Media Inc (NYSE:P) offers a popular service, and the company has a lot of brand capital with its users. It cannot, however, face off against the sheer divinity that the Apple Inc. (NASDAQ:AAPL) holds for some of its customers. That means that many will choose iTunes Radio over Pandora Media Inc (NYSE:P) straight away.

New customers that Pandora Media Inc (NYSE:P) is trying to attract will be more difficult on the back of the iTunes Radio release. The application is baked into the operating system. It’s easy to get to and it requires no research. It’s offered by Apple Inc. (NASDAQ:AAPL), a company that iPhone users are comfortable handing over money to, and one they already have an account with.

Apple Inc (NASDAQ:AAPL) announced yesterday that eleven million people had already tried iTunes Radio, just days after it became available. The Stifel analysis estimates that half of Pandora users have the service on an Apple Inc (NASDAQ:AAPL) device. They also suggest that the quality of iTunes Radio is a “notch above” Pandora.

Pandora fighting back

This sort of analysis on a company that didn’t make a profit last year and is valued at more than $4.5 billion would usually lead to a sell rating and a very pessimistic outlook. The Stifel analysts think that Pandora Media Inc (NYSE:P) can fight back, however.

According to the report new Pandora Media Inc (NYSE:P) CEO Brian McAndrews is a man to trust. The analysts suggest that the company’s long term fundamentals are positive, and the insertion of Mr. McAndrews as CEO is materially positive.

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