Shares of music streaming service Pandora fall sharply on disappointing earnings

Markets Associated Press

Pandora shares fell sharply before the stock market opened Friday, a day after the music streaming service reported disappointing fourth-quarter results and revenue outlooks as it spent more money on marketing and product development.

Continue Reading Below

Although the results were weaker than expected, more people listened to its service during the quarter. Total listener hours rose 15 percent to 5.2 billion in the fourth quarter. Active listeners rose 7 percent to 81.5 million at the end of the quarter.

Pandora, based in Oakland, California, makes most of its money from advertisements. Users can listen to Pandora online for free with advertisements or pay a monthly fee to avoid ads. About 82 percent of its revenue in the quarter came from ads, the rest came from subscription fees.

Its total expenses jumped 45 percent to $122.9 million, spending more on sales and marketing, administrative costs and product development.

The company reported earnings, adjusted for stock option expense and amortization costs, of 18 cents per share. Analysts surveyed by Zacks Investment Research expected earnings of 19 cents per share.

Pandora posted revenue of $268 million in the period, missing forecasts of $277 million, according to Zacks.

Continue Reading Below

For the current quarter ending in March, Pandora expects revenue between $220 million and $225 million. Analysts surveyed by Zacks expected revenue of $241.6 million. For the full year, it expects revenue in the range of $1.15 billion to $1.17 billion. Analysts expected revenue of $1.21 billion, according to FactSet.

Shares of Pandora Media Inc. fell $3.53, or 19.2 percent, to $14.88 in premarket trading Friday. As of Thursday's close, its shares are down about 43 percent in the past year.

_____

Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on P at http://www.zacks.com/ap/P

_____

Keywords: Pandora Media, Earnings Report