Sirius XM hit an 11-year low on Tuesday. Things should get better from here.
Sirius XM Holdings (SIRI 2.76%) hit another brutal multiyear low on Tuesday. Shares of the satellite radio provider haven't traded this low since the fall of 2012. The stock has been cut by more than half -- down 52% -- this year. Sirius XM shares have shed more than two-thirds of their value since peaking last summer.
Business has certainly slowed at Sirius XM, but it doesn't mean that the stock can't bounce back as soon as this month. Let's go over some of the reasons why this media stock could turn the past year of pain into gains.
1. Sirius XM is too cheap
A bullish case for a stock that has fallen substantially this year isn't going out on much of a limb by arguing that it's cheap. You can buy a piece of Sirius XM for less than half of what you had to pay at the end of 2023. The business isn't half of what it used to be five months ago, nor a third of what it was 11 months ago.
However, we can quantify how cheap Sirius XM is right now. Organic revenue growth has been in the single digits for the last nine years, but top-line growth has flatlined now. The good news for value investors is that Sirius XM is trading for just 8 times trailing earnings.
Let's frame how different Sirius XM is now from the last time it traded at this price point. Trailing revenue is now nearly triple -- 164% higher -- than it was in 2012. Its operating profit has also more than doubled. Making matters even more interesting, Sirius XM has been generating 10-figure annual free cash flow for years now. Sirius XM has been using its consistent cash-generating power to return money to its shareholders through buybacks and distributions.
Sirius XM's share count is now 44% lower than it was in 2012. Its revenue and adjusted profit has more than quadrupled on a per-share basis. Sirius XM also initiated a payout policy in 2016 that has continued to inch higher over time. Put another way, the stock's 4.1% yield right now is the highest it's ever been. The stock's earnings and revenue multiples have never been as low as they are this week.
Image source: Getty Images.
2. Folks are paying more for premium music services
It's an odd week for Sirius XM to be hitting its lowest price in more than a decade. Spotify (SPOT 2.29%) announced on Monday that it was increasing prices for its platform from $1 to $3 a month. It's been 15 months since Sirius XM last raised prices for its satellite radio service.
Premium streaming services in general are getting more expensive. This week alone we've seen Twitch and Max join Spotify in announcing price hikes for their premium platforms. This is actually good news for Sirius XM. Sirius XM's biggest competitor isn't free terrestrial radio anymore. The connected car pits it with streaming services, and Spotify is the top dog in that niche. If Spotify is getting more expensive, it either opens the door for Sirius XM to boost margins with a price increase of its own, or it holds its ground and catches listeners bailing from the platforms that are growing more costly.
3. Bullish catalysts are out there
Sirius XM is still relevant despite the ugly stock chart. It continues to entertain 33 million total subscribers in an era where boo birds figured no one would be paying for a live radio service. This isn't a fade out. Revenue growth may be unimpressive, but it has accelerated in back-to-back quarters.
How can the satellite radio monopoly get back on track? Let's start with this summer. A Deloitte study shows that 66% of American travelers have their sights set on a road trip this summer, up from 56% in 2023. As a product consumed primarily in the car, it obviously doesn't hurt that companies are calling employees back to in-office work. New car sales in the U.S. rose 5% in the first quarter of this year.
The stock seems stuck in reverse right now, but the fundamentals are telling a different story. The three reasons outlined above make Sirius XM a strong candidate to bounce back in June.
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Spotify Technology. The Motley Fool has a disclosure policy.
FAQs
SIRI Stock 12 Month Forecast
Based on 10 Wall Street analysts offering 12 month price targets for Sirius XM Holdings in the last 3 months. The average price target is $4.07 with a high forecast of $6.50 and a low forecast of $2.50. The average price target represents a 55.94% change from the last price of $2.61.
Why is SiriusXM stock tanking? ›
Sirius XM naturally suffered a setback due to the pandemic - with stay-at-home mandate at workplaces, instituitions and and family gatherings. Even with the return of normalcy at present, the company's business has been stagnant, rather the company saw its first ever revenue decline in FY 2023.
Is Sirius stock a good buy right now? ›
The financial health and growth prospects of SIRI, demonstrate its potential to outperform the market. It currently has a Growth Score of B. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of A.
Is Sirius losing money? ›
Sirius XM Standalone Details
Total subscriber base declined 1.7% year over year to 33.43 million, missing the Zacks Consensus Estimate by 0.45%. Revenues witnessed a decline due to a 1% drop in subscriber revenues, which amounted to $1.54 billion. Advertising revenues were $40 million, down 2.4% year over year.
What is Sirius stock forecast for 2024? ›
According to our current SIRI stock forecast, the value of Sirius XM Holdings shares will drop by -2.35% and reach $ 2.74 per share by June 6, 2024.
What is the prediction for XM? ›
XM Stock 12 Month Forecast
Based on 2 Wall Street analysts offering 12 month price targets for Qualtrics International in the last 3 months. The average price target is $18.15 with a high forecast of $18.15 and a low forecast of $18.15.
Is SiriusXM having trouble? ›
User reports indicate no current problems at SiriusXM
SiriusXM is a radio service that offers satellite radio and online radio channels.
Is SiriusXM losing customers? ›
The decline from a year-earlier loss of 347,000 self-pay subs resulted from fewer trial starts in late 2023 and higher first-quarter churn. Paid promotional subscribers during the latest quarter fell by 86,000 customers, compared to a gain of 66,000 subscribers in the category last year."
Is SiriusXM worth investing? ›
Buy Sirius XM
It has posted an annual profit every year since 2010. The model works. It expects to generate $2.7 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and $1.2 billion in free cash flow this year.
Is SiriusXM in debt? ›
Total debt on the balance sheet as of March 2024 : $9.57 B
According to Sirius XM's latest financial reports the company's total debt is $9.57 B. A company's total debt is the sum of all current and non-current debts.
According to the latest TipRanks data, approximately 89.98% of Sirius XM Holdings Inc (SIRI) stock is held by retail investors. Invesco owns the most shares of Sirius XM Holdings Inc (SIRI).
Is SiriusXM a penny stock? ›
Sirius XM (NASDAQ:SIRI) is a satellite radio provider that has been a popular penny stock for many years. However, since the beginning of 2024, the stock has seen a major dip in price. This is due to many investors fearing the demand for satellite radio is diminishing. Despite that, Sirius XM remains a solid business.
What is happening with SiriusXM? ›
Sirius XM's guidance calls for $8.75 billion in revenue in FY 2024, 2% lower than the $8.95 billion it delivered in 2023. The media giant sees the free cash flow holding firm at $1.2 billion with a slight step down in adjusted earnings before interest, taxes, depreciation, and amortization.
Do people still listen to SiriusXM? ›
In the fourth quarter of 2023, Sirius XM had 33.88 million subscribers, slightly down from 33.97 million in the corresponding quarter of the previous year.
Is SiriusXM still popular? ›
Sirius XM is serving 33 million total subscribers. It also owns the popular Pandora streaming app it acquired in 2019 to have some skin in the digital space beyond the mobile app for streaming its flagship satellite radio broadcasts.
What is SiriusXM stock prediction for 2030? ›
In 2030, the Liberty Media Liberty SiriusXM stock will reach $ 22.41 if it maintains its current 10-year average growth rate. If this Liberty Media Liberty SiriusXM stock prediction for 2030 materializes, LSXMA stock will grow 7.47% from its current price.
How much debt does SiriusXM have? ›
Total debt on the balance sheet as of March 2024 : $9.57 B
According to Sirius XM's latest financial reports the company's total debt is $9.57 B. A company's total debt is the sum of all current and non-current debts.
How often does SiriusXM pay dividends? ›
