Pandora Media Inc (P)’s Moat Not Nearly as Strong as Analysts Believe

I’m not saying Pandora Media Inc (NYSE:P) doesn’t have a competitive advantage: it does after all use the Music Genome Project (MGP), and every time we skip, like, or dislike a song, it adds to the knowledge of Pandora’s highly developed algorithm to help better predict what songs we’ll want to listen to in the future. Yes, it is absolutely superior to terrestrial radio, because it matches our tastes exactly, and it’s why I listen to Pandora in the car. But to say that first mover advantage alone will act as a strong moat against Apple’s incursion is false, as social interaction/intertwinement is not nearly at a high enough level to keep users loyal.

Apple’s Moat

Part of Apple Inc. (NASDAQ:AAPL)’s moat includes its near obsessive fan base who believe (maps excepted) that nobody does it better than Apple. The company has a limited supply of products, because it puts so much effort into making each one perfect. This halo effect will undoubtedly draw many Pandora users over to Apple, and Pandora’s stock not even wincing at Apple’s actual entry into their market (though it may have been priced already to a degree) I believe is a mistake. Pandora Media Inc (NYSE:P)’s moat is not as strong as certain Bloomberg analysts will have you believe. It’s my belief that iTunes Radio will garner far more of Pandora’s market share than people currently believe.

Margie Nemcick-Cruz owns shares of Apple and Facebook. The Motley Fool recommends Apple, eBay, and Facebook. The Motley Fool owns shares of Apple, eBay, and Facebook. Margie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Pandora’s Moat Not Nearly as Strong as Analysts Believe originally appeared on Fool.com and is written by Margie Nemcick-Cruz.

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