EPIC Advisors’ Sean Hannon bought stock of Sirius XM Radio (Nasdaq: SIRI) for his Bottom-Up Analysis portfolio on Thursday 4/7, a new position. This Covestor model focuses on around one hundred and fifty stocks, where the manager
looks deep into their financial statements and restates what these might look like without any creative accounting. Uses proprietary formula to come up with a price point where securities should be in a perfect world and trades around that price. This is a deep analysis model, looking to capture value from market inefficiency.
Sirius XM investors, along with those of peers Cumulus Media (Nasdaq: CMLS) and Westwood One (Nasdaq: WWON), follow auto sales closely, as most new subscribers come via promotions associated with new car sales. SiriusBuzz notes that Ford overtook GM for new car sales in March, and how this could impact Sirius XM revenue:
The Ford methodology advantages would seem to outweigh the disadvantages, and the impact is seen faster than with GM vehicles. If the shift in auto sales stays in place Sirius XM could see some shifts in their metrics over the next 6 months. With high sales figures, Ford will need to produce more vehicles. Because the company recovers more money faster with a Ford satellite radio than with a GM, and because the subscriptions with Ford are more than twice as long, we will see positive impacts on many metrics.
Meanwhile the Trefis Team at Forbes finds that antitrust fees could restrict Sirius’ ability to raise fees going forward:
While we currently estimate a steady increase in Sirius’s average revenue per subscriber, we believe that the threat of antitrust law infringement can force Sirius to keep the average revenue per subscriber constant rather than rising gradually as we currently anticipate. This would imply 25% downside to our price estimate of $2.00 for Sirius XM Radio’s stock. This scenario would put our estimate for Sirius XM Radio stock at about $1.50.
Here’s how SIRI stock has peformed over the past year, via Google Finance:
Sources:
“How Ford’s Mar ch Dominance Will Impact Sirius XM” Sirius Buzz, April 5, 2011
http://siriusbuzz.com/how-fords-march-dominance-will-impact-sirius-xm.php
“Sirius’ Most Important Lawsuit Does Not Involve Howard Stern”, Great Speculations, Forbes April 8, 2011
https://www.forbes.com/sites/greatspeculations/2011/04/08/sirius-most-important-lawsuit-does-not-involve-howard-stern/
