1-Star Stocks Poised to Plunge: Pandora?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online radio company Pandora Media (NYS: P) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Pandora's business and see what CAPS investors are saying about the stock right now.

Pandorafacts

Headquarters (Founded)Oakland, Calif. (2000)
Market Cap$2.3 billion
IndustryBroadcasting
Trailing-12-Month Revenue$240.7 million
ManagementChairman/CEO Joseph Kennedy
CFO Steven Cakebread
Trailing-12-Month Return on Equity(12.5%)
Cash/Debt$90.8 million / $0
CompetitorsCBS Radio
Clear Channel Communications
Sirius XM Radio

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 68% of the 447 members who have rated Pandora believe the stock will underperform the S&P 500 going forward.

Late last year, one of those Fools, Seansonfire, nicely summed up the bear case for our community:

Pandora Media is a great idea, and provides a great service to the masses. Unfortunately they are losing out to other services that offer either similar music services or a better experience entirely. Spotify and Rhapsody are two of such services that offer the customer the full experience of choosing their own music, building playlists, and listening at their will to literally anything they want. Pandora does not allow you either the flexibility or the depth that either Spotify or Rhapsody offer. ...

The ability for any of these music services including Spotify, Rhapsody, and Pandora to make money in these ever increasingly technically proficient population is still a huge question. Major threats from Bit-Torrent sharing, Apple iTunes and Amazon still make these companies revenue streams highly at risk.

As an investor you should never try to buck the trend, and the trend is away from Pandora.

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Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned.  Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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