Pandora Media ( P ) reported a fourth-quarter earnings miss after the close on Thursday as its active listener base fell, and as acquisition costs and other expenditures took a toll. Pandora stock dropped about 4% after hours. It had set a record low Wednesday but surged more than 8% during the trading day Thursday after a report that the company is in discussions about a sale. The streaming music leader is in a heated battle with rivals, including Apple ( AAPL ), Spotify, iHeartRadio, Amazon.com ( AMZN ) and Google owner Alphabet ( GOOGL ). “Building a business like we have is very difficult and we now have a huge lead and advantage that is incredibly challenging for new entrants to overcome. We are leading the disruption of a $17 billion radio advertising market,” said Pandora CEO Brian McAndrews on the call with analysts. “It is a generational opportunity to drive the future of music for years, if not decades, to come. We are confidently making the decision to invest now to fully capture that opportunity, which is why we are comfortable being temporarily EBITDA(earnings before interest, taxes, depreciation and amortization)-negative.” In October, Pandora bought Ticketfly for $450 million, vaulting the online music-streaming leader into the live-event and ticket-sales business in its bid to take on its rivals — the likes of Apple Music, Google Play Music and Amazon Prime Music. Pandora got final approval to buy Web-streaming service Rdio in December for $75 million. Through several agreements reached the past two years, Pandora is now aligned with music superstars including Justin Bieber, Lady Gaga, Taylor Swift and Adele. The company has inked deals with labels including Sony/ATV, Warner/Chappell, Universal Music Publishing Group, Songs, Atlas and Downtown Music Publishing. In December, Pandora announced multiyear licensing deals with ASCAP and BMI, two major trade groups that between them own the music publishing rights to 20 million songs. Pandora Listeners Decline Pandora has registered an all-time high of 10% share of U.S. radio listening, McAndrews said on the call. But the company also said its user numbers fell during the quarter. Pandora reported 81.1 million active listeners in Q4, down from the 81.5 million active listeners that the service posted in Q4 2014. In December, the online music company got a price target cut from Macquarie, which cited rising royalties and other costs for the Oakland, Calif-based company. “New royalty assumptions and increased costs bring our estimates lower,” wrote Macquarie analyst Amy Yong in a research note, in which she cut Pandora’s price target to 17 from 19. “Pandora has inked multiyear agreements with major labels in the U.S. covering 60% market share of all publishers. We estimate total content costs of $765 million in 2016, stepping up 10% per annum through 2020.” Earlier on Thursday, a New York Times report said that Pandora had held discussions about selling the company . After the news, Pandora stock shot up. According to the New York Times, Pandora is working with Morgan Stanley to meet with potential buyers. Pandora closed at 9.09 on Thursday, up 8.2%, but is down 53% since mid-October as Wall Street frets about how Pandora is withstanding growing industry competition and sluggish user growth. The company said 30% of revenue went to sales and marketing efforts in Q4 2015 vs. 26% in Q4 2014. Pandora now carries a market value of $1.9 billion, down from more than $7 billion two years ago. In December, the online music company got a price target cut from Macquarie, which cited rising royalties and other costs for the Oakland, Calif-based company. “New royalty assumptions and increased costs bring our estimates lower,” wrote Macquarie analyst Amy Yong in a research note, in which she cut Pandora’s price target to 17 from 19. “Pandora has inked multiyear agreements with major labels in the U.S. covering 60% market share of all publishers. We estimate total content costs of $765 million in 2016, stepping up 10% per annum through 2020.” The leading online music company posted a 9 cent per-share loss, swinging from an EPS ex items profit of 6 cents in Q4 2014. Analysts polled by Thomson Reuters had been expecting EPS ex items of 7 cents. Pandora reported Q4 revenue rose 25% year over year to $336.2 million, beating consensus estimates for $331.17 million. For Q1, Pandora guided revenue of $280 million to $290 million, up 6% year over year at the midpoint. The company guided an adjusted EBITDA loss of $65 million to $75 million. That compares to adjusted EBITDA of $43.8 million in Q4 2014 and $24.8 million in Q4 2015. “We enter 2016 with an enhanced portfolio of assets, cost certainty and substantial competitive advantages. We’re invested in the long-term and I could not have more conviction about the ability of Pandora to lead the future of music,” McAndrews said. Pandora stock has sagged since the June launch of Apple Music — a service combining paid subscription music streaming with a 24/7 live global Internet radio station. While Pandora remains the Internet streaming leader, its market share is falling as competition grows.