Pandora Is Tanking

The Internet radio developer reported after the bell Thursday that user growth fell last quarter, and its advertising revenue also came in lower than expected.

RBC Capital Markets is unfazed. In a note released after Pandora announced its earnings they wrote:

Pandora has beat the upper end of its Revenue guidance in 11 out of the last 12 quarters, tho the upside this quarter was relatively modest. That reality and the recent rally in the stock provided the set-up for an expectations correction, which is how we view the 11% after-market selloff. Our long-term thesis remains unchanged, however. We continue to see Pandora executing well despite the presence of a strong competitive set. Solid usage metrics, the buildout of a local ad salesforce, and integration into mainstream radio ad-buying platforms have all combined to improve Mobile monetization, which gives P leverage against a very high, fixed-cost licensing structure.

The company ended June with 76.4M active listeners, down 1% from last month but 7.5% higher year-over-year. Advertising revenue came in at $177 million, slightly below the consensus estimate for $178 million.

Shares are trading around $29.