“Would it make sense for Apple to buy the streaming music and internet radio market leader?” D.M. Martins Research asks for Seeking Alpha. “Pandora is the number one player in internet radio and streaming music. It is hard to think of any other mainstream industry in which the market leader is valued at less than $3 billion, which is the case here.”
“Growing organically has been a surprisingly challenging task for Apple Music, considering the Cupertino company has easy access to the iPhone user base and should theoretically have little problem cross-selling its music service to existing customers,” Martins writes. “But as it turns out, even Spotify has been doing a better job at growing its subscriber base.”
“By adding Pandora’s current 81 million monthly active listeners to its portfolio, Apple would become the undisputed leader in the space. In addition, I don’t consider the current market value of each Pandora active listener ($33, calculated as the company’s market cap divided by total user base) to be too aggressive of a figure,” Martins writes. “Keep in mind that Pandora estimates a Premium customer to have up to $91 in lifetime value and a non-paying user to be worth no less than $21. The acquisition, therefore, might make sense if Apple is able to monetize on the sizable user base effectively.,” Martins writes. “”
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MacDailyNews Take: No.
Apple will buy Pandora for the same reason they bought Palm.
Why Apple should buy Sirius XM and Pandora – December 14, 2016
Largest shareholder urges beleaguered Pandora to sell the company – May 17, 2016
Pandora said to have held talks about selling the company – February 11, 2016
Apple Music takes a huge bite out of Pandora – October 23, 2015