Friday, August 26, 2011

Online Music Darling Pandora Opens Its Box -- Q2 Numbers Revealed

Followers of my blog know that I have written about online music darling Pandora several times. In the eyes of most in the digerati, Pandora -- much like its European cousin Spotify -- can do no wrong. And, while I too am a Pandora fan -- I have been a paying customer for several years now -- candidly, I have always questioned the service's long-term ability to become a meaningful profit-generating machine. I also certainly recently seriously questioned its market valuation. As we sit here today, Pandora (which just recently went public) is now valued at a whopping $2 billion! What justifies these lofty numbers you ask?

Well, Pandora just opened its box of numbers for the first time as a public company. Yesterday, the company released its Q2 numbers. And, while Pandora's revenue growth is impressive (it generated $67 million in revenues -- up 117% year-over-year), it continues to lose money. By my calculations, Pandora lost $3.3 million in Q2 alone.

Now don't get me wrong, Pandora has lots of money in the bank -- $95.3 million to be exact. But, a $2 billion valuation on these numbers? Call me crazy, but I simply don't get it. And, I am a music lover who streams music 24/7.