Shares of Pandora (NYSE:P) dropped 7.63% on Monday, just days after the streaming music service company’s massive investment deal closed.
Pandora announced on Friday morning that the company reached an investment deal with satellite radio giant SiriusXM (NASDAQ:SIRI) . The initial news sent Pandora’s stock price up as much as 7% last week, but Monday’s trading was not as kind to the online streaming music company.
Amid a tech industry-wide pullback, shares of Pandora closed just below their previous 52-week low. Pandora’s big dip came after its shares moved hands at three times its average volume.
The deal will see SiriusXM and its majority owner Liberty Media (NASDAQ:FWONA) make a $480 million investment in Pandora. The nearly half a billion-dollar investment came after Pandora reportedly turned down a complete SiriusXM takeover proposal—and the two companies have been linked since Pandora rejected a July takeover offer.
The satellite radio company now reportedly owns about a 19% stake in Pandora and will also hold three board seats.
On top of the SiriusXM deal, Pandora sold its Ticketfly business for $200 million. What might have some investors worried is the fact that Pandora only purchased Ticketfly in October 2015—for $450 million in cash and stock—in a move to try to expand beyond its core ad-supported music business, which continually fails to expand its user base.
Pandora has also seen its dominance in the online and streaming music business infringed on due to Apple’s (NYSE:P) Apple Music and Spotify’s continued growth in the premium ad-free service sector.
The company and its investors can only hope that the new influx of cash will help struggling Pandora focus on bolstering its main music-based business.
"This strategic investment in Pandora represents a unique opportunity for SiriusXM to create value for its stockholders by investing in the leader in the ad-supported digital radio business, a space where SiriusXM does not play today,” Sirius CEO Jim Meyer said in a statement.
“Pandora's large user base and its ability to provide listeners with a personalized music experience are tremendous assets.”
Shares of SiriusXM are down marginally in after-hours trading while Pandora has gained 0.64% since the closing bell. It seems that for now, only time will tell if SiriusXM’s Pandora investment will pay off.
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