Why Pandora Could Be The Next Google

Pandora is Not Just About Music

Personalization of the web is the next big thing and its just as big as search was 10 years ago!  That is why I am so happy to hear that Pandora raised $250M in an IPO this week after being rejected by hundreds of "smart venture capitalists" who said the company will never make any money and be successful. That is the same thing many said about Google (Nasdaq: GOOG) back in 1999 before they found their search advertising model Adsense and Adwords.  I am still kicking myself for not buying Google's stock at $95 per share and not making the same mistake buying Pandora at $13 per share below their IPO price of $16.  Aside from the obvious economics issues all of the short sellers and negative analysts are point out, I think the company could be disruptive to three huge industries who may resist the change (Telecom, Advertising, Entertainment).  This is why I love the company and I am not making the same mistake this time and buying the stock (NYSE: P).   Here are reasons why I like the product, stock, growth, the vision and the industry disruption.

1. Pandora is FREE and buying music via Apple iTunes is very expensive
2. Discovery of new brands, products, bands and music is endless 
3. Its not JUST about music.  Pandora will recommend TV, Movies and Videos? 
4. The Music Genome Project can apply to other things using 1's and 0's
5. Ad-supported cloud-based business models are red hot
6. The average person listens to 13 hrs of radio & 3 hours of owned music/week
7. Pandora currently has 94M registered users up, up from 77% from 53M
8. The company operating almost break-even only losing $6.8 million
9. Revenues of $51 million, up 131% from $21.6 million in qtr
10. Projected revenues of $250M in 2011
11. Active listeners of 34 million, up 88% from 18 million
12. Average listener hours up 127% to 1.6 billion hours from .7B hours
13. Pandora’s adoption driven by Apple iPhones, iPads and Android Phones
14. Pandora 94M users with only 1% of customers are paying (huge upside) 
15. Netflix 25M subs paying $100 per year forecasting 50% growth (Market Cap 13B)
16. Sirius 25M subs paying $100 per year forecasting 40% growth (Market Cap 8B)
17. Only a $5 CPM covers the cost of running the Pandora service (upside)
18. Pandora hasn't even started to sell local advertising yet (huge upside)
19. Pandora's display advertising is targeted, relevant and not annoying. 
20. Entertainment & telecom companies hate change (upside)
21. Wireless carriers may up sell data plan packages Pandora mobile data plans
22. Small stock float only 9.2% of shares outstanding compared to 24% tech avg
23. An interesting short squeeze opportunity with all the negative sentiment
24. Reed Hastings of Netflix says WiFi in TVs is a revolution.  (huge upside)
25. Pandora TV app eliminates need for the expensive home audio system
26. Pandora is another reason you don't need a cable box anymore 

This is ongoing list I will continue to add to.  Please submit your suggestions below.  See this company presentation on Slideshare about what the Genome project is measuring for recommendations.  Its not just likes.   

Pandora and the Music Genome Project

View more presentations from CAMT

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