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Pandora Media ( P ) is in for even tougher competition in the months ahead, Edison Investment Research said Friday, as buyout rumors swirled the day after the leading online music company posted a Q4 earnings miss and reported that its listener base continued to shrink. The streaming music leader is in a heated battle with rivals, including Apple AAPL , Spotify, iHeartRadio, Amazon.com AMZN and Google owner Alphabet GOOGL . “Competitive pressure is intense and is likely to get worse” for Pandora in 2016, wrote Edison Investment Research analyst Richard Windsor in an industry note Friday. “Pandora reported difficult Q4 2015 results, where bullish commentary by management was undermined by speculation that, behind closed doors, the company is up for sale.” Pandora represents “a big opportunity” for any company that can solve the company’s weaknesses with user growth and better monetization, he said. FBR & Co. analyst Barton Crockett identified Apple, Amazon, Facebook and Spotify as potential suitors. Not long before Pandora released its earnings Thursday, a New York Times report said there had been discussions about selling the company . According to the NYT, Pandora is working with Morgan Stanley to meet with potential buyers. Pandora stock shot up on that report. Pandora has declined to comment. Pandora stock was down 15% in afternoon trading in the stock market today , below 8, earlier hitting an all-time low of 7.10. Pandora stock has sunk nearly 50% the past year. Spotify Called Top Pick To Acquire Pandora Windsor said his top pick in the list of possible buyers is privately held Spotify, “but we are not convinced that it has the financial clout to absorb Pandora even after the hefty falls in its share price.” Apple, however, “is quite capable of crushing Pandora organically, Google remains a possibility as (video wing) YouTube is already a major source for free streaming music for millions of listeners. Amazon is another possibility, but its model of subscription only with Amazon Prime does not fit well with what Pandora has developed,” Windsor said. While Pandora registered an all-time high of 10% share of U.S. radio listening in Q4, the company also said its user numbers fell. Pandora reported 81.1 million active listeners in Q4, down from the 81.5 million in Q4 2014. While “Pandora is still arguing that it can rise to 100 million active radio users over time … we are not convinced,” wrote FBR’s Crockett in an industry note Friday. On the bright side, Crockett said, with Apple’s recent decision to start charging for its Apple Music service, “Pandora now has much less competition for free than it did (before),” adding that some smaller free services have also shut down following the higher rates imposed by the Content Royalty Board rate setting group. Apple discontinued free streaming on its service iTunes Radio on Jan. 28. Apple Music costs $10 a month. Pandora has an ad-free premium service for $5 a month. The Apple Music subscription streaming music service launched in June. Scalper1 News
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