Pandora Media's (P) stock price tumbled 25% last week when the company announced disappointing earnings and a less-than-rosy outlook.

But let's shift our focus away from the miss to the actual fundamentals driving the business. Revenue and subscriber growth have been stellar, but costs -- especially content costs -- are growing at a higher rate.

Below, we take a quick look at what the growth metrics tell us. Pandora competes with other radio players such as Clear Channel Radio, CBS (CBS) Radio, Sirius XM (SIRI) and Spotify, which has expanded via Facebook.

The above figures give us a few insights about Pandora's fiscal 2012 results.

1. Revenue growth was much higher than the growth in active listeners. The growth in advertising and overall revenue was almost same as that for listener hours. This implies that an average Pandora listener is spending more time listening to Pandora's songs, and that bodes well for advertising revenue growth. These figures further imply that Pandora has maintained ad monetization levels.

2. Subscription-revenue​ growth was slower than ad-revenue growth, implying that keeping the content free and selling ad slots remain the preferred choice for Pandora.

3. Total costs, especially content costs, grew at a higher rate compared to the revenue growth. This is the fundamental issue with Pandora's current business model.

The company will need to improve its ad-monetization or push-subscription services in order to stop these content costs (as a percentage of revenues) from rising. For fiscal 2012, these costs stood at around 54% of revenue. If Pandora is not able to get these costs down, there can be about 25% downside to our price estimate. You can gauge this by modifying the forecast above.

Overall while the growth looks good, content costs still remain a concern. We are in process of updating our pricing model in the light of recent earnings.

Our price estimate for Pandora stands at $9.48, implying a discount of about 20% to the market price.