(UPDATE 2) With word of Appleâs development of a Pandora-like music service out, Pandoraâs stock began to feel the aftershocks. As of 9:40am PST Friday morning, Pandora stock fell 2.37% to $10.24, which represented more than an 18% drop in early trading. Even though it was an up day for the overall market, Pandora stock closed Friday down $2.10â to $10.47, a fall of 16.71%â.
Appleâs decision to create a music service and enter the streaming market âcould shake up the sector,â said analyst Nat Schindler with Bank of America Merrill Lynch.
"Apple is currently the largest music retailer in the world and the move is likely being made to unseat rapidly growing streaming competitors like Pandora and Spotify," he continued.
Schindler mentions that if Apple promotes its own service on its devices (which it likely will), Pandora can be in real trouble.
"Pandora currently has 72 percent-plus market share of online radio and six percent share of the total radio market, partially due to its near ubiquitous device reach on over 400 different devices," he said. âApple's large device installed base makes it a more serious threat than other current or potential competitors. Pandora we believe gets 40-50 percent of its total usage currently from iOS devices."
It is yet to be seen how news of Appleâs music service phases the competition, but considering how massively wide an audience Apple already has and the dollars behind the development, it is likely that Apple users and fans will gravitate towards whatever the company has in store. However, it will also be highly important for Apple to clearly demonstrate how and why their service is enough to convert a Pandora or Spotify streamer into an Apple one.