Friday, September 7, 2012

Pandora Stock Drops In Wake Of Apple's Reported Music Streaming Service

Hisham Dahud/Hypebot

Now that word of Apple’s development of a Pandora-like music service has gotten out, Pandora’s stock is beginning to feel the aftershocks. As of 9:40am PST this morning, Pandora stock fell 2.37% to $10.24, which represents more than an 18% drop in early trading.
While Pandora takes a hit on Wall Street, Apple’s stock conversely looks much more positive. As of this morning, Apple broke $680 for the first time ever, due in large part to the anticipation of their September 12th launch of the iPhone 5 (and possibly an iPad mini). Apple’s market cap has now risen above $635 billion.

Apple’s decision to create a music service and enter the streaming market “could shake up the sector,” said analyst Nat Schindler with Bank of America Merrill Lynch.

"Apple is currently the largest music retailer in the world and the move is likely being made to unseat rapidly growing streaming competitors like Pandora and Spotify," he continued.

Schindler mentions that if Apple promotes its own service on its devices (which it likely will), Pandora can be in real trouble.

"Pandora currently has 72 percent-plus market share of online radio and six percent share of the total radio market, partially due to its near ubiquitous device reach on over 400 different devices," he said. “Apple's large device installed base makes it a more serious threat than other current or potential competitors. Pandora we believe gets 40-50 percent of its total usage currently from iOS devices."

It is yet to be seen how news of Apple’s music service phases the competition, but considering how massively wide an audience Apple already has and the dollars behind the development, it is likely that Apple users and fans will gravitate towards whatever the company has in store. However, it will also be highly important for Apple to clearly demonstrate how and why their service is enough to convert a Pandora or Spotify streamer into an Apple one.

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