Pandora (BUY, $9 PO) Stock view: Focus on on-demand product, but questions on growth Pandora’s recently launched on-demand subscription product will likely be the focus of 1Q investor call. Although the product is on limited release, we expect investor to focus on initial reception of the product (positive reviews in media} and whether Pandora is capable of growing the subscription base to 10mn over the next several years. Initially Pandora will not likely see an impact on revenue from premium subscriptions as it is giving current Pandora One subscribers a free six month trail of Pandora Premium which may also impact subscription revenue for 1Q. From our initial time with Pandora Premium, we found playlist creation smooth and easy to use with Pandora quickly auto-filling play lists after picking a few songs, but Pandora lacks the curated playlist selection found in Apple music and Spotify and we encountered some missing songs/artists from the on-demand platform. The real question will be whether Pandora’s platform is 1) good enough to pull exiting on- demand users from other services to Pandora (Pandora indicated roughly 60% of Pandora users are using another on-demand service); 2) can it convince people to upgrade from free Pandora to Pandora Premium; and 3) how will Pandora grow its active listener base from here. Pandora has had a largely stagnate active user base over the last year and we think even with the new on-demand product could face difficulty growing its users, especially as it increases its ad loads in key markets. Key theme/metric(s) for 1Q: Ad rate growth and sub metrics Pandora began rolling out Pandora Premium on March 15", and we think key questions for the call will be; 1) initial reception of Pandora Premium; 2) when it will be fully available to all users; 3) will Pandora Premium driving increased users; and 4) how have ad load changes be received by free users. Pandora is increasing its ad load per hour to increase its RPM rates, but this also