Shares of Pandora Media fell more than 10 percent on Wednesday after the online streaming music service company gave a muted fourth-quarter outlook.

The company posted higher-than-expected third-quarter earnings and revenue after the market closed on Tuesday.

Investors shrugged off that news and focused on broader concerns about the company's growth potential, given a flock of competitors as well as executives' remarks about fourth-quarter revenue.

We are not comfortable adding to shares at current levels due to valuation and the increased competitive threat from other social music platforms, despite differences in the business models compared to Pandora's Internet radio platform, Stifel Nicolaus analyst Jordan Rohan wrote in a note to investors on Wednesday.

Stifel Nicolaus has a hold rating on Pandora stock.

Pandora, which has been around for a decade, runs a mostly free service that recommends different songs based on listener's playlists. Almost 90 percent of its revenue comes from advertising.

The company faces competition on all flanks, from traditional radio companies such as Clear Channel, which has started its own customized online streaming service; satellite radio providers such as Sirius XM Radio Inc; and Spotify, which allows users to integrate its streaming music through Facebook.

Investors had been eagerly awaiting Pandora's initial public offering in June, but the stock price has sunk about 32 percent since then. The company's market capitalization is roughly $2 billion.

Pandora said it expected fourth-quarter revenue of $80 million to $84 million. Rohan wrote that was below previously implied guidance of $83 million at the mid-point.

During a conference call with analysts on Tuesday, Pandora said it was taking a responsible approach to its forecast, keeping a watchful eye on advertisers who might cut back on fears of a wider economic downturn.

There's no impact at the moment, but we are paying close attention to what's going on in the marketplace, Pandora Chief Financial Officer Steve Cakebread said during the call.

Shares of the company were down 10.5 percent at $10.60 in morning trading.