Pandora down, but room for optimism

Streaming music service Pandora (P) has not been able to engender the confidence of the market, despite revealing over 700,000 listeners more than they had a year ago in their quarterly report. Furthermore, by Friday, the stock was up 13% and at a new 52-week high. So, why is the stock popping a bit?

Many believe it’s just another example of short investors looking to cash in their chips before a drop comes, and thus causing a drop of their own. Long types were staying bullish despite the dip and hoping for prices of $20 per share and greater in the not-so-distant future.

The real question is whether people believe that Pandora can continue to prosper despite the fact that streaming music is a market that grows more and more crowded by the day. Furthermore, the new entries are not exactly lightweights- we’re talking Google (GOOG), Twitter, and perhaps Apple (AAPL) thinking about getting into the mix.

Furthermore, with costs of licensing content on the rise and Pandora looking for relief from Congress on that front, Pandora still can seem like a bit of a risk.

You have to remember that there are also upstarts like Spotify, Songza, Grooveshark, and others that are looking to take a share of Pandora’s pie.

Thus, Pandora finished down by over 4% today, and rumors persist that Pandora will need to be acquired by a big fish and bundled with other content services to survive in the long run, especially as media services become more and more structured as all-in-one subscriptions and devices meant to simplify the lives of consumers.

There would definitely appear to be a lot of immediate and long-term threats for Pandora, but some investors noted that they are finally earning more than their content acquisition costs, and the consistent increase in subscribers brings hope, as well.