Even though there has been a number of rumors circulating about a buyout or a potential investment, Pandora Media Inc. (NYSE:$P) has fallen roughly 12% since the start of the week. According to the New York Post, Verizon Inc. (NYSE:$VZ) might invest up to $100 million if it does not organize its outright sale to Sirius XM Holdings Inc. (NASDAQ:$SIRI).
Coming from a fundamental viewpoint, Pandora Media Inc., which is a music streaming platform, is relatively weak. In Q1, Pandora reported revenue that increased just 6.3% to $316 million. They clearly missed their estimate by $2.15 million and created a net loss of $0.24 per share. Additionally, Pandora disclosed that two of their directors would be leaving and there will be a new $150 million cash infusion from KKR, an American multinational private equity firm, in return for Series A convertible preferred stock.
The upside is that there are a variety of analysts who remain bullish on the stock even though there have been declines. Goldman Sachs, for example, pulled the stock from its Americas Conviction List following a 36% from its October addition. That said, Sachs stilled retained its Buying rating and price target of $16.00 per share. According to analysts, Pandora’s 100 million users and five billion listening hours each quarter should develop a floor for the stock price.
From a technical level, Pandora’s stock broke down from prior lows which were made in late-May to near S1 support at $8.06 after they momentarily touched the pivot point at $9.52. When looking at the relative strength index, investors will see that it is pointing to oversold conditions at 28.94, but that said, the moving average convergence-divergence (MACD) is continuing to show a bearish trend. Following S1 support, the next support level is S2 support at $7.22, which depicts a 12% decline from $8.20 per share.
There were investors who had hoped that there would be a buyout from Sirius XM earlier in the week, but this dream has started to fade in light of recent days.
If you’re interested in investing in technology, it’s recommended that traders think about moving from long-term positions to stock options. This will allow them to capitalize on a possible buyout with putting a lot of capital at risk. With that in mind, short positions are most likely to remain risky as there is the possibility for a favorable announcement from either Verizon or Sirius XM.
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