After a rumor that Jay Z was interested in snapping up the streaming music leader started making the rounds, Pandora Media Inc(NYSE:P) Media investors were singing an upbeat tune late last week. The stock naturally gave back most of those speculative gains, as the deal failed to materialize.
There was not even a single glimpse of sense in that deal. Jay Z was reported to be in a constant trial of finalizing a US$ 56.2 million bid for theSwedish streaming specialist and WiMP parent,Aspiro. So, was ittoo soon to think about him taking over another digital music bite? Also, according to S&P Capital IQ data, Pandora commands an enterprise value of approx. US$ 3 billion. How much of a buyout premium above that would it take to get the deal done? Jay Z’s rich, but that would seem to be too rich for the music industry icon’s blood. The real buyer will likely come from the ranks of the big-tech shakers that are angling to have a larger presence in digital music, and actually have billions collecting cobwebs on their balance sheets. The key for them will be not to overpay for Pandora, especially after seeing the stock shed roughly 60% of its value since peaking a year back.
Not to mention, Pandora’s stock may have hit a fresh 52-week low last week, but in some ways, it’s as popular as ever. It kicked off 2015 with a record 81.5 million active listeners.The two things that have been holding Pandora back are its decelerating growth, and the challenge to smoke out premium users. Its base of active listeners is large, but it moved just 7% higher through last year.
