Is Pandora a buy now?

Shares of the personalized internet radio service are up after the company's announcement that it's issuing new shares, but is that enough reason for investors to buy?

By Motley Fool Investor Beat Sep 17, 2013 2:16PM
Shares of Pandora (P) are up after the company announced it will be issuing 14 million new shares -- 10 million from the company and 4 million from venture capital firm Crosslink. Motley Fool Analyst Michael Olson thinks that this is pretty bad news. The company's largest shareholder, Crosslink, is bailing out, and he sees it as a sign that investors should as well.

Despite Pandora's performance this year, Michael is distressed by the fact that the free internet radio service's cost per user has increased and that the company still isn't really making money. In addition, Pandora needs the music companies more than the music companies need Pandora, which makes Michael think that investors' best move is to stay away.
Image: Teens with MP3 player (© RubberBall/SuperStock)Shares of the company tumbled 4.8% to $22.85 in after-hours trading Monday following the news, but they climbed back up Tuesday afternoon to $25.07.

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