How Pandora Media Inc. Shares Soared 63.5% Higher in the First Half of 2018

What happened

Shares of Pandora Media (NYSE: P) rose 63.5% in the first half of 2018, according to data from S&P Global Market Intelligence. The provider of music-streaming services based on deep analysis of your musical preferences can attribute most of this gain to a fantastic first-quarter report.

So what

Pandora's first-quarter revenue increased 1% year over year to land at $319 million. On the bottom line, adjusted net losses were nearly cut in half to land at $0.27 per share. The analyst consensus had been pointing to a 4% revenue drop and net losses in the neighborhood of $0.38 per share. Share prices soared as much as 21% higher the next day and Pandora's stock simply never looked back after this surge.

Now what

The strong first-quarter results rested on rising use of Pandora's Premium Access program, which gives users of the free, ad-supported service a taste of the paid subscription version in exchange for a single 15-second ad view. Users who try the full-on premium product have a tendency to sign up for the sampled ad-free service at a higher rate than other Pandora listeners, so this was a direct driver of Pandora's surprisingly strong sales.

That being said, Pandora is coming off of a rough 2017 and a string of hit-and-miss earnings reports. All told, the stock is trading 5% lower over the last 52 weeks. Pandora shareholders are hungry for good news, and the first-quarter results provided a small taste of a better business model. Now it's up to the company's management to follow up on the promise of these early Premium Access tests and see if Pandora can build a sustainable strategy for the long term.

10 stocks we like better than Pandora MediaWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Pandora Media wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Anders Bylund owns shares of Pandora Media. The Motley Fool owns shares of and recommends Pandora Media. The Motley Fool has a disclosure policy.