Music streaming service Pandora is considering selling itself, according to a new report. The company has engaged Morgan Stanley to explore a potential acquisition of the company from an interested buyer.

Pandora is still the largest streaming music service in the U.S., but its listener growth has stalled as of late, as competitors like Apple Music and Tidal have lately entered the field. Pandora's most direct rival in terms of offering a similar listening experience, iHeartRadio, is also growing fast.

Pandora and iHeartRadio operate differently than on demand music streaming services such as Spotify and Apple Music. Listeners can only listen to stations built around their favorite artists and genres as opposed to listening to a specific song on demand, and that might be why growth has stagnated, as many music fans desire that ability.

As a result, Pandora is developing an on demand subscription service similar to that of its competitors, which is expected to debut in late 2016. The company also hopes it can convert 10 percent of its free listeners to paying subscribers to the service in order to generate more revenue.

Meanwhile, Pandora's licensing costs and royalty payments are increasing, due to new laws requiring higher payments, along with recent agreements to pay royalties for older songs. Currently, the company generates around 80 percent of its revenue from advertising, but Wall Street is skeptical about its ability to grow.

The company currently operates only in the U.S., Australia and New Zealand, but has plans to ultimately expand worldwide. Some analysts believe it may be too late, however. Since last October, Pandora's stock has fallen about 60 percent.

"Pandora hasn't managed to create a compelling story for Wall Street. Every year it is progressively stealing more of total radio listening time, but the street expects a dynamic growth story to accompany a streaming media company," says Mark Mulligan, digital media analyst with Midia Research.

"They are realizing they they're late in the fourth quarter and they have to throw a Hail Mary pass," says Richard Greenfield, media analyst at BTIG Research, about the potential sale of the company.