Spotify has recently come out stating they could become a publicly traded company within the year, which means Pandora would certainly have to gain market share not only for the company but for shareholders. Music and audio applications are gong to be revived here as people are going towards Podcasts and passive media consumption.
How important is Pandora Media's Liquidity
Pandora Media
financial leverage refers to using borrowed capital as a funding source to finance Pandora Media ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Pandora Media financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Pandora Media's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Pandora Media's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Pandora Media's total debt and its cash.
Going after Pandora Financials
If you take a look at the stock chart using the monthly time frame, you can see that price has steadily declined which could indicate there is an issue. It could be something such as the user base falling or a greater issue such as gaining revenue off of their product. Either way, if you are looking to invest in Pandora, you need to understand if this is trading at a discount or premium and let that dictate your next move. Do not chase price and let price come to you.
There are other different companies out there too that can take away users, and one of them is Sound Cloud, which is a platform where people can join for free and upload their music, talk shows, podcasts, and other forms of audio. With that, people are listening to new music and other information on this platform, which can directly affect the way Pandora operates.
With that being said, some risks to keep in mind are competition and Spotify going public. The competition appears to be slowing growth according to the stock chart and this could spell for more difficult times ahead. Another risk to keep in mind is what the application offers and if they are providing content based on the demand of users. Listening to the user base and what they want is the best way to maintain a business and Pandora needs to do this.
After it is all said and done, this may or may not work for your current portfolio holding. Take a look at the details and fundamentals and see if this is trading at a discount and providing value. Never rush into an investment and take your time because it’s not a good idea to invest in what you do not know. If you get stuck, reach out to an investing professional and they can help to point you in the right direction. Pandora will certainly face stiffer competition if Spotify does in fact go public.
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Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Pandora Media. Please refer to our
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