Author: Jaclyn Pearl
- New CEO and CFO plan to restructure the business to focus on “ad-tech and audience development efforts,” and expect to save $45 million
- Launching of Pandora Premium helped the over-all number of paid subscribers reach over 5 million
- Programmatic audio will allow Pandora to gain more ad revenue
- Analysts value Pandora as over 50% greater than its current market capitalization
Pandora Media (NYSE:P) is currently trading at only $4.50 per share – down 65% from last year. Despite Pandora’s recent struggle to turn a profit, new CEO Roger Lynch and new CFO Naveen Chopra have big plans to restructure the business by cutting roles, focusing on ad-technology, and expanding into Atlanta where costs are lower. Their cost-saving efforts are expected to save Pandora $45 million this year.
Pandora Premium – the firm’s first music-on-demand subscription service launched in March of 2017 – hit over 1 million subscribers by October, and their total number of Plus and Premium subscribers increased by 25% that year. However, with competitors like Spotify – who currently has over 70 million subscribers – Pandora is likely better off focusing their revenue on advertisement sales for their own 70 million active listeners.
Pandora recently entered a pilot program for programmatic audio, a platform that allows advertisers to easily buy audio inventory from Pandora. This move will allow Pandora to significantly increase their revenue from ads since many advertisers are moving away from display and video ads and towards audio ads. Getting involved in programmatic audio can also take Pandora a step in the right direction regarding development efforts with voice-controlled devices.
In the past few years, Pandora has taken a hit, but with restructuring plans, new growth initiatives, and a $480 million investment from SiriusXM, Pandora has the opportunity and likelihood to bounce back and offer high returns to stockholders, especially if shares are bought at its current undervalued price.