Pandora shares plunge on fears of rival Apple service
Shares of Pandora Media Inc. tumbled by double-digit percentages on Friday as investors feared that Apple Inc. would start a competing streaming radio service.
Apple is in talks with record labels to license music for a service that would play songs based on a similar genre or artist, according to a report in The Wall Street Journal.
Apple already has a stronghold in music through its iTunes store.
"They are the biggest threat out there," said Capstone Investments analyst Rory Maher.
Pandora is a popular online streaming music service that makes most of its money through advertising. But there are a host of competitors, including Clear Channel, Sirius XM Radio and Spotify.
Apple initiated talks for licenses with record companies only recently, and it could be months before an ad-supported service is launched, The Journal said.
Representatives from Apple and Pandora did not immediately respond to emailed requests for comment.
"Apple service reports are likely to negatively impact Pandora shares for the foreseeable future," Wedbush analyst Michael Pachter wrote in a note to investors.
Pandora shares trade in the $10 range and before the news had gained 15 percent in the past three months.
Last week, Pandora reported stronger-than expected quarterly results on higher advertising revenue as more people listened to music on their mobile devices, and the company raised its full-year revenue outlook.