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Apple Inc. (NASDAQ:AAPL) Music Launch Sinks Pandora Media Inc. (NYSE:P)

Apple Inc (NASDAQ:AAPL)

Apple Inc. (NASDAQ:AAPL) yesterday unveiled its much-awaited Music service. Though the news is positive for Apple, it’s not for Pandora Media Inc. (NYSE:P). In the past, any hint of Apple Music has been bad for Pandora stock and we saw that again on Monday, when the stock dipped 3.8% to its lowest price in a month, says a report from CNBC.

Apple Music (AAPL)

Can Pandora withstand Apple threat?

In 2012, similar drops were witnessed in the Pandora stock with many in the double-digits, primarily due to reports of Apple making rigorous efforts in streaming or with reports suggesting Apple planning something new altogether,a says the CNBC report.

As per the report, the drop in Pandora stock is primarily due to the business model of the music firm, which feeds on Apple iPhone and Google Android users.  With Apple introducing their own streaming music service, there are many reasons for iPhone users to disregard 3rd party music products. Even improving their services might not help Pandora, which has a market cap of around $3.5 billion, as it may not be able to match the marketing and product expenditure by Appl. Inc/, which is sitting on a cash pile of over $194 billion.

Beating Pandora may not be easy for Apple

On the other hand, Pandora might have the ability to withstand threats from Apple. In June 2013, when Apple was about to launch iTunes Radio, an ad-based rival to Pandora, its stock lost 15% in just two-days. But after a short decline in users, Pandora and its stock recovered from the losses. The music firm claims to have reached around 10% of all U.S. radio listening in March, says the report. Pandora has retained its users by creating a personalized experience for them, something that may not be easy for Apple.

In an interview on Monday, Pandora founder Tim Westergren, said, “It’s a fantastically hard thing to do,” adding, “New products generate a lot of trials, but the real test is sustained listening.”

Apple Music, which will cost $9.99-a-month, is more like Spotify’s on-demand service than Pandora’s ad-supported model. But since Spotify is not a public company, we can’t know the impact. However, we do know, after the announcement of Apple Music, Spotify CEO Daniel Ek tweeted two words “Oh ok,” and then suspiciously deleted those words, leaving experts guessing the meaning and intent of that reaction.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.