Here’s a ballsy call on Pandora’s newly public stock from BTIG Research analyst Rich Greenfield: He just initiated coverage of Pandora (P) with a Sell rating and a $5.50 price target.In other words, he’s expecting Pandora stock to tank. (It’s already down 15% today to $14.80.)
In short, he thinks it’s massively overvalued.
“Pandora is a great consumer music service, but its business model does not scale in the same way as other successful Internet businesses.”
Key points: Pandora has fixed per-song costs, so it doesn’t benefit there from volume, and as more listening shifts to automotive and mobile, Pandora will rely more on audio-only advertising, which isn’t as lucrative as display/multimedia advertising. Plus, more competition is on the way.
More at BTIG’s blog (registration required).
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