Shares of Pandora Media Inc. (NYSE: P) saw a handy gain to start off the week after it was reported that the chief executive officer, Tim Westergren, is stepping down. This music streaming company has been funky for a while, and not that good funk.
Excluding Monday’s move, the stock is actually down 36.5% so far in 2017, which pales in comparison to the broad markets. Over the past 52 weeks, the stock is down 32%.
Currently Pandora has not selected a successor for this 17-year veteran that founded the company. Although, the CEO role had been previously filled with other professional managers.
Earlier this month, Pandora inked a deal with Sirius XM Holdings Inc. (NASDAQ: SIRI) for a $480 million investment. Some analysts were encouraged by the renewed core focus and profitability of this deal, even if they dislike convertible stock financing, while others were largely negative.
Credit Suisse even commented:
We decrease our price target to $11 as we account for the total cash inflow of $608 million on the following factors: Ticketfly Sale to Eventbrite for $150 million in cash + $50 million in notes receivable, $480mm in investment from SiriusXM, less $22.5 million in termination fees to KKR – offset by an increased diluted shares outstanding as well as anticipated cash dividend payments. Concurrent with the announcement, Pandora also reiterated its 2Q17 and FY17 guidance for the full year prior to any adjustments for Ticketfly. Second quarter revenue is expected to be between $360 million – $375 million and Adj. EBITDA loss is ($65)-($50) million. FY17 revenue is expected to be in the range of $1.5 – $1.65b. Given the timing of the Ticketfly sale is 3Q17, we have eliminated its contribution in our model starting in 4Q17. Upon close of the transaction, SiriusXM will receive three seats on the Pandora Board. Given the prior move to extend the timing of the investment from KKR as well as the interest from Liberty previously widely reported in the media, we do not believe this development is a surprise and for the time being, it does look like the board will consent to watching the development of the Premium subscription business as it has launched already.
Shares of Pandora were last seen up 2% at $8.46, with a consensus analyst price target of $11.67 and a 52-week trading range of $6.76 to $14.98.
Sirius shares traded down 0.5% at $5.32. The stock has a 52-week range of $3.74 to $5.53 and a consensus price target of $5.21.
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