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Pandora Is Even More Overvalued Than You Think

I'm all about the adjusted earnings per share number versus GAAP number to get a more realistic picture on how a company is doing, but in the case of Pandora (P) it is a bit ridiculous. Yes, I agree that one-time charges and gains should be excluded as they often don't paint an accurate picture but looking over P's last quarter earnings I'd say GAAP is more reliable.

Growth does indeed continue to be impressive however. P reported non-GAAP revenue (non-GAAP is arguably fine for revenue specifically) of $268 million or an increase of 33%. Of this advertising revenue shot up 36% and subscription and other revenue jumped 24%. Non-GAAP earnings per share were $0.19 compared to $0.18 in the year-ago period.

My beef: This "non-GAAP" figure excludes $26.9 million in stock-based compensation and was the overwhelming majority of the difference between GAAP and non-GAAP. I might even be tempted… Read More …