Summary:

Fresh off its IPO, internet radio company Pandora (NYSE: P) touted its growing user-base and expanding partnerships during a meeting with an…

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Fresh off its IPO, internet radio company Pandora (NYSE: P) touted its growing user-base and expanding partnerships during a meeting with analysts Tuesday. But the prospect of competition from established giants like Apple (NSDQ: AAPL) and *Clear Channel*, as well as the reportedly imminent U.S. arrival of European streaming sensation Spotify, prompted Albert Fried & Co. analyst Rich Tullo to slap a “sell” rating on the company, driving the stock down over 3 percent.

Pandora told analysts it now has 100 million registered users, up from 90 million in April, pushing its radio market share to 3.6 percent from 2.3 percent at the end of 2010, and 36 million active monthly users across platforms (including mobile devices and television). In an effort to push into the auto market, which company executives say accounts for nearly 50 percent of all radio listening, Pandora announced a new partnership with Toyota to integrate its product into the Scion car line, and said it has expanded its partnership with Ford.

Despite the rosy announcements, Pandora faces an uphill climb to profitability, especially given the escalating competition in the internet radio space. After years of chatter, Spotify is reportedly on the verge of its U.S. debut, which could attract listeners and dollars away from Pandora, especially if reports of deep Facebook integration are borne out.

“Spotify is really the biggest threat, in our view,” Tullo said. “It’s going to sell into Facebook’s 650 million users, and if you look at the growth of Zynga, it’s clear that an alliance with Facebook is definitely what you want, because it’s the biggest distribution channel out there.” The analyst initiated coverage of Pandora with a “sell” rating and a price target of $13, well below its current level of over $18.

Pandora also faces a threat from established radio titan *Clear Channel*, which is upgrading its own streaming service, iheartradio, to include playlist functionality. Bob Pittman, *Clear Channel’s* chairman of media and entertainment platforms, told the Associated Press that iheartradio has several advantages over Pandora. He said *Clear Channel*,will be able to offer listeners millions more songs than Pandora, and unlike the web-radio pioneer, isn’t too concerned with making money.

“To us it doesn’t matter if it ever succeeds as a business,” Pittman said. “We only have to have it succeed as a feature.”

Pandora does not have that luxury. Tullo said he doesn’t expect the company to reach profitability until the second half of fiscal year 2013.

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