Pandora Media -P - Daily - Oversold into an old support level

501 6 9
Pandora is down to around the range of its lowest valuation over the past 3 years since it went public. Margins are improving steadily from -10% to -4%. Revenues are growing strongly to $853 million while the market cap is $3.8 billion, which leaves it at 4.45 times sales, which you can see is at the bottom end of its historical valuation zone.

With the stock market at all time highs and this stock sitting on old valuation and technical support, I think it makes sense to give it a try on the long side. Risk 3 ATR's (average true ranges) and look for 3-5 ATR's of profit in the 21-23 range over the upcoming month.


Tim 3:25PM EST 12/5/2014
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Investors are hesitant to put money in due to the listeners decreasing (as one point of view) and fierce competition (the other). Of course some scream it is heading for bankruptcy, but i am also watching that triangle. Breaking below indeed leads it in view to 9.
The cost of streaming is going up as the number of subscribers rises dramatically - so they are having a problem of too much growth at too high a cost. For a stock to go down, you need sellers and bad news and Pandora has had its share of that. As we go into Holiday Music season into year-end, it will be interesting to see if they can convert free users to paid users. Their database of "thumbs up" and "thumbs down" votes might have some unrecognized value out there. As for bankruptcy, I heard the same of Netflix over the years but if they can just stay alive, the upside could be massive. But, options might be the best way to approach Pandora - go long calls instead of stock. For me, I'm happy to own the stock in the right size.
2use timwest
I agree, at this price it is more attractive. But it had some really bad slumps while the market went all time high. P is a bit more volatile than i like (probably the most volatile stock ive owned) in terms of day to day price changes. But i would like to see a higher low at least, as a lower low may take it down with the speculative traders seeing that weakness
Hello Tim, there is a harmonic pattern in play
Pandora weekly swing and possible animal in sight


all the best
Excellent constructive analysis. Utilizing both technicals and fundamentals vastly improves your odds as an investor. Very obvious fundamentals traders also consider overbought/oversold support/resistance conditions just as technical traders do.
+1 Reply
Looks great, excellent breakdown, both fundamental and technical.
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