Big News for Pandora Stock
Pandora Media Inc (NYSE:P) has been quietly upping its game, and it could be a big deal for Pandora stock. After signing deals early in the week to increase the size of its collection, Pandora has made an announcement that stacks the company up against its competition: Apple Inc.’s (NASDAQ:AAPL) “Apple Music” and Spotify.
Pandora announced late Thursday that it has signed a direct licensing agreement with Warner Music Group Corp., the only major record label left after the company had already entered into agreement with Sony Music, Universal Music Group, Inc. and Merlin Network early in the week.
Pandora Media Inc also launched a new subscription service, “Pandora Plus,” on Thursday. This innovative listening experience comes at just $4.99 per month and lets the subscriber skip, replay, and listen offline when connectivity is lost. (Source: “Introducing Pandora Plus, More Control and Great New Features at a Very Affordable Price,” Pandora Media Inc, September 15, 2016.)
Although Pandora stock has been lackluster in the past few trading sessions, the news is likely to boost the stock as it readies for competing with its bigger rivals by giving more choice to subscribers and introducing its on-demand subscription service later this year, at the standard price of $10.00 per month.
At present, Pandora has about 80-million subscribers for its Internet radio service, but only a fraction of them pay. By adding new features to its music streaming service at an affordable price, the company hopes to convert many of them into paid subscribers.
Analysts have been upbeat about Pandora’s latest licensing deals and look forward to the introduction of on-demand subscription product in the fourth quarter. Both JPMorgan Chase & Co. (NYSE:JPM) and Piper Jaffray Companies (NYSE:PJC) are have rated Pandora stock “overweight” and SunTrust Robinson Humphrey (SunTrust Banks, Inc. (NYSE:STI)) had upgraded Pandora stock to “buy” from “neutral” early in the week.
Although the company has a much smaller music catalog than its competitors, Pandora co-founder and CEO Tim Westergren is very confident that the “most personal music experience” that the company is trying to create for the listeners puts it in a perfect position to compete with industry giants such as Apple, Spotify and Amazon.com, Inc. (NASDAQ:AMZN). Amazon is likely to introduce a similar service at the same price point very soon.
As Pandora Media Inc looks to consolidate its position in the industry, investors would be looking forward to the quarterly results and the announcement of the launch of the on-demand subscription service. A decision to expand into new geographies would be icing on the cake for Pandora stock.