Pandora Media Inc (NYSE:P) shares went up by 4% upon the emergence of the report that its rival company, Spotify was injecting about $8.4 billion shillings to its financing strategy.
The investor move has raised a lot of questions especially considering the fact that Pandora’s shares have declined by 30% in the past year. It is also questionable that investors have made such a move considering that the fact that Spotify is a rival company.
The two are online platforms with a bit of a difference. Spotify allows users to create their playlist by selecting the songs and artists. Pandora, on the other hand, is a radio network that broadcasts over the internet. Their rivalry is based on their target market as they share the same audience.
The move could mean a great deal for both companies because the valuation could be based on increasing popularity. However, it is perhaps wrong for the company’s stockholders to assume that Pandora’s value will go up because the same has happened to its rival.
Pandora’s current stock price is valued at $17.50 with the shareholders try to equate the share value to that of the rival company. Spotify’s valuation as of Friday was at $28.50, which is an equivalent of $8.4 billion for the whole firm.
There was no official word from Pandora about the move. However, Company CEO, Brian McAndrews announced that the company has come up with a way to get to the top of the leader board. They intend on bringing together the best collection of music, technology and people, to create a more appealing blend.
A caution advisory has been issued to the investors. Most of the investors have been against the company. Investors have been reported to short squeeze themselves in order to shield themselves form loss.
Pandora Media Inc (NYSE:P) faces a lot of competition, and the nightmare has only just begun. Existing rivals are already making their mark in the industry. There is a reason for concern with the new entries making their way into the streaming market. The new Tidal streaming service recently began operating. It is expected to have a lot of support especially because it is sponsored by Jay Z. it also boasts of support from many artists.
This sort of competition spells bad news for Pandora and the rival companies. The market share will probably suffer.
