Pandora’s expansion into ticketing sounds interesting, but does it make solid business sense? So far, Wall Street is having difficulty with Pandora’s rationale for acquiring Ticketfly for a lofty $450 million, with shares sinking substantially following the announcement.
Wedbush analyst Michael Pachter was taken aback by an acquisition that seemed “exceedingly expensive,” while pointing to major technological integration and core competency concerns. “We see little value added for Pandora beyond promoting artists, and note that Pandora has limited experience or aptitude in promoting or hosting concerts,” Pachter continued.
This just doesn’t seem to be stacking up strategically, especially for a company struggling to achieve real profitability. And the biggest factor determining profitability will be royalty commitments, not ticketing. “Investors remain focused on the [Copyright Royalty Board] rate determination, expected late this year,” Pachter continued.
Wedbush maintained its ‘Outperform’ rating, but dialed down its pricing target from $27 to $26.