Now let me lay out the clearest risk here in this short – in a bubblicious market like this, especially because bubbles inflate high-growth company’s stock prices the most of all, Pandora can certainly continue to skyrocket. Current estimates for Pandora, which for the last couple years have continually been re-raised, are for the company to generate $800 million in sales in 2015 which would generate about 25 cents per share in earnings. That would mean the company would grow the topline about 50% per year for the next two years. The company’s been delivering that kind of growth for a few years in a row now, so it’s possible it keeps delivering that kind of growth.
But let’s look at the reasons for shorting it here. The stock has gone straight up for so long in this App Stock Bubble that it’s now trading at more than 100x those current 25 cents per share in earnings that the company might make in 2015 if they actually continue to grow their topline 50% per year.
Estimates haven’t moved much at all since Apple rolled out its new iTunes radio for iPhone, iPad and the iTunes program on your computer too. I expect that Apple’s iOS will soon be replacing the crappy interfaces and stodgy proprietary dashboard computers in high-end cars. I expect that at least a good chunk, maybe 10-20% of Pandora’s listeners will migrate over to the Apple iTunes radio this quarter and that won’t slow next quarter. Meanwhile, Spotify, which allows you to download and/or listen on demand to any major label’s songs, from your smartphone/tablet or computer, for less than $10 a month is also heating up here in the US where Pandora has reigned.
Somebody’s gonna find themselves chair-less when the music stops playing.
I’m going to add a Pandora short. If you use common stock, I might look to cover this thing if it pops above $30 in the near-term. I’m going to use some January puts with strikes prices around $22-24. I do think that the Pandora’s momentum-driven momentous stock rally is exhausting itself.
Mi se pare o foarte buna oportunitate. Am pus deci un ordin de cumparare PUT 24 P ian. 2014 @2.95. Sunt sanse mari sa se cumpere curand.