Pandora -P -Daily -Basing area with plenty of upside potential

NYSE:P   None
1278 15
I published this chart two weeks ago and it continues to accumulate and set-up for an advance in 2015. Earnings aren't due for a number of weeks and the year-end has made for some additional tax-loss selling to keep pressure on the share price.

The Valuation is at the lower-end of the historical range you can see on the bottom graph where PSR ranges from just under 5 times sales to several spikes in excess of 10 times sales. I don't advocate buying any stock with a PSR over 10, in general, unless their sales are growing 100% a year or they have a combination of sales growth and margins that add up to 100%. (50% sales growth +50% margins = 100% = 10 times sales).

You can see that Pandora's margins are rising, but are still negative at -3.95% at the latest reading (2nd chart from the bottom). You can also see that Pandora's sales are charging ahead at a fast clip. From 2013-2014, Pandora's sales increased from $383MM to $588MM (MM=Million). That's nearly a 50% increase. October 2013 to October 2014 is an increase from $527 to $853MM, which is an increase greater than 50%, so sales are accelerating at a fast rate.

You can see the declining wedge price pattern, which is indicative of depressed shareholder mindset and a build-up of negative price momentum. Weak stock prices invite short selling and trend-following, which becomes a catalyst for upside surprise when good news comes out. We always enjoy plenty of wrong-way traders on the other side of our trade and a big short position would be a great tailwind should Pandora keep the pace going for the another quarter. This is the time of year when I listen to holiday music on Pandora, so I have Pandora on my mind.

Use a $15-$16 stop loss and look for upside to the $25-$30 area for the upcoming 1st Quarter.


Tim 11:55AM EST, December 22, 2014
Subscribe to my indicator package KEY HIDDEN LEVELS $20/mo or a discount for a year and join in the trading room KEY HIDDEN LEVELS here at TradingView.com
You have been mostly wrong on P, Tim.

WRONG: Pandora Media -P - Daily - Oversold into an old support level
WRONG: Pandora - P - Daily - Also Massive Consolidation Triangle
WRONG: Pandora Media Inc - P - Daily - Building a base on "key levels"

RIGHT: Pandora to follow Netflix NFLX rally.

P somewhat follows NFLX. So what do you think NFLX will do next week, after it jumped to fill the gap?
+1 Reply
2use GMOTruths
P is really tricky to play. i was myself surprised Tim covered it - i would not risk it. Its beta and behavior is not easily predicted, so take it with a grain of salt. The NFLX and P look similar from afar, but many instances where one rallied and the other went lower. Make your own analyses and use charts of others as reference.
Agree 2use. Pandora is tricky. It's very squirrelly. But if you make your trade size small, then it doesn't hurt you too bad when it doesn't work out. Trade SIZE is really important.
+1 Reply
2use timwest
Well, if we take the hurt you going to get - yes. I try to avoid hurting myself at all. So i risk manage and P is one of those stocks i'll really tripple think entering.
timwest GMOTruths
Thanks GMOTruths. It was frustrating to keep taking swings after a few untimely calls, but that's how trading works. I'm aware of my batting average. The good part is that I'm break-even in $'s going into this trade. So, I don't mind treading water. This last trade has been pretty great.
+1 Reply
GMOTruths timwest
You are welcome. P is in a H & S on the 15 min time frame. An overpried a mid cap trading at 14 times its book value.

BTW - Thanks for pointing out NFLX! News about NFLX, including with Adam Sandler making a deal with them helped drive the price of that up, making it too, a viable short, which I just entered. Great idea, short P; short NFLX.
timwest GMOTruths
Oh - And another comment on why I follow Pandora. I was able to catch the breakout of the base from the year before and had a great return from that idea. I didn't ride the whole way up, so buying it on pullbacks has been my preferred strategy, especially with the bearish view I've had on many overvalued internet-related companies in the past few years here at TradingView. So, that may help understand where I'm coming from on Pandora. I try not to sweat out being right on every trade, but I do my best at all times. Trading is a difficult business and maintaining your mindset is very important no matter what is happening. The hardest part of trading is taking the next trade after a string of losses. Most people trade too big after a long string of profits and then give all their profits back very quickly and ALSO many people suffer in their results because they stop trading or trade too small after a long losing streak. You have to know what you are doing and then STICK TO IT through thick and thin, good times and bad. If trading was easy then everyone would be doing it. Clearly, people don't last long trading because it is extremely difficult.
2use timwest
Maybe an advice - what to do if you have a long losing streak and you suspect that it is caused by what you are doing...why continue in the same way? Yes, you may believe that the system is ideal, but why not stop and check if it is actually flawed?
+1 Reply
Because I have been doing this since 1987 full time and it is like flipping a coin. You can go through long streaks of wins and long streaks of losses. It's maintaining your confidence that is the problem and also containing your confidence after you have done well. It's important not to beat yourself up or pat yourself on the back at all. Winning gets the ego in the way and losing gets your sense of self-worth called into question. Just keep trading at a level where each trade isn't that important to your overall results. I also vary my trade setups. I don't take all of the same exact type of trade. You take a bottom pattern, then a top pattern, then a breakout pattern, then a different pattern... and so on. Vary your positions around so they aren't all just one big position.
Hi Tim, great fundamentals. How do I get the data feeds for the indicators (Revenue, Margin, price/Sales)? I'm a TradinvView Pro User. Thx
Home Stock Screener Forex Screener Crypto Screener Economic Calendar Shows How It Works Chart Features Pricing House Rules Moderators Website & Broker Solutions Widgets Charting Solutions Lightweight Charting Library Help Center Refer a friend Feature Request Blog & News FAQ Wiki Twitter
Profile Profile Settings Account and Billing Refer a friend My Support Tickets Help Center Ideas Published Followers Following Private Messages Chat Sign Out