Investors headed for the exits at the opening bell Wednesday (3/7) after Pandora Media reported fiscal Q4 results that fell short of expectations. The stock opened on the NYSE at $10.93, down more than 23% from Tuesday’s closing price of $14.27 before the financial results were released.
Pandora’s stock was as low at $10.53 in early trading, but recovered back above $11.00 to as much as $11.30. But when the closing bell sounded the stock had fallen 23.9% to $10.86.
Fiscal Q1 (February-April) is typically the lowest for advertising, Pandora executives told analysts in the quarterly conference call. But most analysts had been modeling for at least a little growth from their Q1 numbers – numbers which were already too high. So the company’s guidance that Q2 revenues would be $72-75 million put it well below the Thomson/First Call consensus of $86 million. In fact, the high end of $75 million was below the lowest estimate of the 10 analysts in the Thompson/First call tally, which was $76 million.
Fiscal Q1 revenues last year were $51 million, so the company guidance is for year-over-year growth of 41-47% – a far cry from the 71% gain in Q4.
RBR-TVBR observation: Public companies typically try to control expectations so they only report upside surprises, not downside ones. Wall Street does not like bad surprises.