Rumors and speculation are good enough for Pandora Media investors.
The streaming audio service’s shares soared by more than 16% on Friday, thanks to a CNBC report from David Faber suggesting that it is no longer resistant to merger talks with Sirius XM.
“According to people familiar with the situation,” Pandora has indicated a willingness to engage to its “longtime suitor,” Faber said in a five-and-half-minute report airing on the business news channel just after the Opening Bell on Wall Street Friday morning (12/2).
But, Faber added, “It is very early,” quoting a person familiar with the situation saying the companies were in “the first inning of the process.” He added that there is no assurance Pandora and Sirius XM will reach a deal.
However, it seems David Faber carries some weight with investors.
RBR + TVBR OBSERVATION: So David Faber is the new E.F. Hutton? How dare you thrust a company’s share price forward and offer a report you apologize for, yet nevertheless has the entire investor community and every business news reporter writing about it. Report the news, CNBC. Don’t create it — especially where there may not be any. Jim Cramer is no help, either. Perhaps they were part of the group of options investors that had the ability to grab Sirius at $11. Nah … that’s just our baseless opinion that is not based on some shadowy source familiar, but some random idea that just popped into our head to grab our audience’s attention.
At 9:38 a.m. Eastern, Pandora shares sat at $11.78. By 9:52 a.m., shares in “P” had shot up to $13.11, before jumping on a rollercoaster ride that has them at $12.90 at 2:30 p.m. Eastern. At 2:45 p.m. Eastern, shares soared to $13.25, before closing up 16.1%, to $13.33.
The activity came even as Faber offered caution to his own report.
“It is early, early, early … I can’t say it enough. In the old world that I inhabited for so many years, frankly, to be honest, I would probably not do a story like this. In the new world of journalism, where we are right now, I wanted to basically forestall somebody else doing a story we knew was half wrong, half right, and I gotta’ come on and correct it.”
Mad Money host Jim Cramer, sitting alongside Faber, dismissed Faber’s caution.
“I know these guys,” he said of Pandora’s executive team. “They didn’t want to sell. This is a big change. Don’t minimize your report.”
Should the share prices stay where they are, options traders who thought the stock price was heading south will see themselves forced to hand over ownership of Pandora shares at a bargain price of $11 per share — the subject of RBR + TVBR‘s top story on Friday.
Interestingly, Pandora CFO Mike Herring canceled his appearance at an investor conference set for last week, citing a conflict, Faber notes; the company did not go into detail as to why Herring’s plans had changed.
Pandora’s Q3 roadshow is scheduled to take place today through Wednesday in Tokyo, Taipei and Hong Kong.
Greg Maffei, who oversees Sirius XM as parent company Liberty Media Corp.’s, was unsuccessful in a July 2016 bid to acquire Pandora at $15 a share. The potential deal fell apart as Pandora argued that the per-share price was too low.
Meanwhile, Sirius XM investors were less than thrilled with the prospect of acquiring Pandora. At the Closing Bell, SIRI shares were off 5.6%, to $4.30.