Investors Won't Be Tuning Into SiriusXM
A closer look at the price data for SiriusXM stock suggests the volume will continue to go down.
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American tennis icon John McEnroe reigned during the 1980s. McEnroe is remembered for infamously shouting at a chair umpire after a questionable call, “You cannot be serious!”
When I look at a chart of SiriusXM SIRI, a similar thought goes through my mind. As in, “You cannot be SiriusXM!” The stock has become volatile in recent days, which is uncharacteristic of this name, but that doesn’t mean the stock is a buy.
New York-based SiriusXM gets little attention these days, in part because satellite radio never caught on to the degree that some anticipated. Now the stock is making some noise, gaining 22% since the June 25, 2024 close.
The heightened interest in SiriusXM is likely due to a perceived arbitrage opportunity. Liberty SiriusXM LSXMA is the tracking stock for Liberty Media’s holdings in the company. Liberty owns 83% of SiriusXM’s stock. SiriusXM and Liberty SiriusXM are expected to be combined into one entity during the current quarter.
Technically, the stock has been trending lower for years, but a sudden burst of activity has elevated SiriusXM above its 50-day moving average (blue), at least for now. On Friday, the stock was rejected at its 200-day moving average (arrow), and this was followed by a 12.4% decline on Monday. The movement is occurring on heavy volume (shaded yellow).
SiriusXM was formed from the merger of two satellite radio companies, competitors Sirius and XM, in July 2008. The stock has been a poor investment in recent years, as the company battles with competitors like Spotify SPOT and Apple Music AAPL for market share.
SiriusXM shareholders have lost money for four consecutive years:
- 2020: -10.91%
- 2021: -0.31%
- 2022: -8.03%
- 2023: -6.34%
2024 has been a particularly bad year for the stock, as it has lost 40.8% year to date.
While SiriusXM set off fireworks in early July, nothing has really changed. The company’s listener base is slowly eroding, losing 359,000 of its approximately 33.88 million listeners during the first quarter of this year. Listenership peaked in the fourth quarter of 2019, when SiriusXM boasted 34.91 million listeners.
There are reasons to believe SiriusXM’s listener base will continue to erode. The contract for one of its biggest draws, Howard Stern, expires next year. There is no word on whether the 70-year-old talk radio icon will renew his contract. SiriusXM president and chief content officer Scott Greenstein recently referred to Stern as “irreplaceable,” but suggested SiriusXM personalities Conan O’Brien and James Corden would pick up slack if Stern should depart.
Unfortunately, I don’t see an exciting future for SiriusXM. The recent action in this stock will likely fade very quickly. SiriusXM will likely see its listenership continue to erode, along with its relevance.
At the time of publication, Ponsi had no positions in any securities mentioned.
