Pandora Media Inc (P) Burns Bulls on Debt Offering

Pandora Media Inc (P) is singing a bearish tune, after the Internet radio company announced a $300 million debt offering

Dec 3, 2015 at 10:51 AM
facebook twitter linkedin

Pandora Media Inc (NYSE:P) is down 5.2% at $13.53, after the company last night announced a private $300 million debt offering. It plans to put the proceeds toward the launch of an on-demand service in 2016, and to aid in license acquisition as well as international expansion.

The move is being met with a mixed reaction on Wall Street. On the one hand, Raymond James upgraded its assessment to "outperform" from "market perform." On the other, BMO initiated coverage with a tepid "market perform" opinion. This ambivalence is reflected more broadly, too. Of the 25 analysts tracking P, 13 have dished out "buy" or better ratings, versus 12 "hold" or worse designations.

By contrast, short-term option traders appear to be on the bullish end of the spectrum. P's Schaeffer's put/call open interest ratio (SOIR) of 0.47 indicates calls more than double puts among options in the front three-months' series. More significantly, this SOIR rests below all but 1% of comparable readings recorded in the past year.

Digging deeper, calls in the January 2016 series have been extremely popular in recent weeks. Specifically, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) indicates significant buy-to-open activity at the 15 and 17 strikes -- though some of this was likely tied to stock.

On the charts, though, Pandora Media Inc (NYSE:P) has done little to warrant such optimism. The shares have lost 24% on the year, including a severe bearish gap in late October, following earnings.

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Best stocks for October and worst stocks for October


Special Offers from Schaeffer's Trading Partners