Will Sirius and Pandora Make Money?

Therefore, it is easy to see why Sirius is buying Pandora. A combined Sirius-Pandora could have 109.33 million listeners. On the other hand, Sirius and Pandora’s biggest competitor Spotify has around 58.5 million listeners in 2018.

Moreover, Spotify will not match Pandora’s listener base soon. Statista; for example, calculates that Spotify will have 76.7 million listeners in 2022.

Value investors will be interested in Sirius and Pandora because of the low price and huge audience. Under these circumstances, we have to ask will Sirius and Pandora make money?

In Pandora’s case the answer is no. For instance, Pandora reported a net loss of -$99.45 million and an operating loss of -$94.14 million for 2nd Quarter 2018. Markedly, Pandora generated $384.79 million in revenues and a gross profit of $125.21 million for 2nd Quarter.

In addition, Pandora recorded a negative free cash flow of -$50.94 million, a negative operating cash flow of -$49.36 million, a negative investing cash flow of -$111.34 million, and a negative financing cash flow of -$2.29 million for the same period.

Obviously, Pandora is incapable of making money from its operations. Pandora is losing money because it has to pay for almost all of its content music.

To make matters worse, Pandora gives the music it pays for free away online. By and large, that is a great deal for stars like Beyonce, whom Pandora pays for the privilege of promoting her songs.

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Pandora Execs Cash Out

These figures call Pandora’s whole business plan of distributing streaming music online into question. The company cannot make money, even though it has around 70 million regular users. One reason why it isn’t making any money is that Pandora has no way of charging those users for its service. Pandora’s business model basically consists of paying for music and distributing it for free.

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