The more music Pandora streams for its burgeoning audience, the more it has to pay in royalties. And unless it can draw in more advertising sales to pay for those fees, the Internet radio site will continue to take a hit on its bottom line.
Founded in 2000 as the Music Genome Project, Pandora (P), which went public in 2011, has struggled to turn a consistent profit.
Shares tumbled almost 25% Wednesday, a day after the Oakland-based company posted a fourth-quarter loss of $8.2 million, or 5 cents per share, falling short of forecasts. Sales during the quarter also missed estimates, coming in at only $81.3 million, compared to Wall Street’s call for $83.1 million.