Pandora's fourth-quarter forecast triggers stock price loss

Pandora's fourth-quarter forecast triggers stock price loss

Pandora Media Inc., on Tuesday December 4, released its fourth-quarter financial forecast; the document is pretty disappointing since the Oakland company projected a loss of 6 cents to 9 cents a share on revenue of $120 million to $123 million, while analysts polled by Thomson Financial had expected Pandora to earn 2 cents a share on $130.3 million in revenue during the same time lapse.
The negative projection immediately triggered a 21% slide in Pandora's stock price, which lost $2 (arriving to $7.45). It had closed earlier at $9.45, up 49 cents.

Pandora's chief executive Joe Kennedy explained that concerns about the overall U.S. economy have caused advertisers to pull back spending for January. Indeed Pandora gets the bulk of its revenue, nearly 89% in the third quarter, from advertising.
"It is important to understand that out fiscal quarter includes November, December and January," Kennedy commented. "What we've seen is that advertiser caution has grown with respect to macroeconomic concerns, in particular with the 'fiscal cliff' being discussed for January. As a result we have to be more cautious in our guidance to account for the uncertainty".
The "fiscal cliff" is a series of tax breaks - for the benefit of both individuals and corporations - that are set to expire at the end of this month unless federal lawmakers can reach an agreement on extending the tax cuts.