Company Reports

SiriusXM's first quarter was not bad, but revenue remains stagnant, and the SiriusXM subscriber base has continued to contract. With investment in content and technology to improve the SiriusXM streaming app and integration into vehicles, management expects subscriber growth to pick up. However, we are now forecasting slower long-term growth, and we're reducing our fair value estimate from $7.50 to $5.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its satellite radio network, primarily to consumers who pay a subscription fee, often tied to a vehicle. Its radios come preinstalled on a wide range of cars and trucks in the US. Most of the stations on the SiriusXM network are proprietary, differentiating the service from streaming music and terrestrial radio.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its satellite radio network, primarily to consumers who pay a subscription fee, often tied to a vehicle. Its radios come preinstalled on a wide range of cars and trucks in the US. Most of the stations on the SiriusXM network are proprietary, differentiating the service from streaming music and terrestrial radio.

We are maintaining our $7.50 fair value estimate for Sirius XM. While the firm awaits the completion of the deal with Liberty Media, its heavily criticized acquisition of Pandora in 2019 is providing some return. The subscription and advertising sides of its audio broadcasting segment continued to decline during the fourth quarter, but with a bit less uncertainty regarding digital advertising and continuing shift of listener behavior toward streaming, Pandora posted growth.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its satellite radio network, primarily to consumers who pay a subscription fee, often tied to a vehicle as the firm’s radios come preinstalled on a wide range of cars and trucks in the U.S. Most of the stations on the SiriusXM network are proprietary, differentiating the service from streaming music and terrestrial radio.

There is still room for digital transition in advertising, especially in the audio medium, as shown by Sirius XM’s third-quarter results. Advertising revenue growth in Pandora and off-platform, the firm’s streaming segment, mostly offset the continuing weakness in overall broadcast audio advertising, which contributed to a slight decline in the Sirius XM segment revenue. While Sirius XM platform subscribers declined slightly, the increase in trial funnel listeners from last year, albeit with no change from the previous quarter, indicates a slowdown in subscriber losses. We expect this to continue, which, with increasing streaming advertising revenue, bodes well for Sirius XM. Management maintained its full-year revenue, adjusted EBITDA, and free cash flow guidance. Our fair value estimate remains at $7.50.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its satellite radio network, primarily to consumers who pay a subscription fee, often tied to a vehicle as the firm’s radios come preinstalled on a wide range of cars and trucks in the U.S. Most of the stations on the SiriusXM network are proprietary, differentiating the service from streaming music and terrestrial radio.

Sirius XM continues to perform solidly despite a challenging backdrop, as second-quarter revenue and EBITDA met FactSet consensus projections. The SiriusXM platform shed 132,000 self-pay customers in the quarter due to the weak pipeline in the second half of 2022, but the performance improved sequentially versus the loss of 384,000 subscribers in the first quarter. Ad revenue at Pandora continues to hold up better than expected due to strength in off-platform advertising. Management increased full-year guidance for free cash flow for the second quarter in a row while maintaining its revenue and adjusted EBITDA expectations. We are maintaining our $7.50 fair value estimate.

Sirius XM shares jumped by over 42% on July 20 with a 6% pullback in aftermarket trading. The share price spike was not driven by any company-specific news but rather by a short squeeze in the afternoon. Roughly 34% of the limited float in Sirius XM shares were held short at the start of the day as a number of short sellers were reportedly attempting a complicated trade to capitalize on the reformulation of the Liberty Media tracking stocks. As there is no apparent change to the underlying businesses at Sirius XM, we maintain our fair value estimate of $7.50. While Sirius XM shares are now trading near our fair value, we think shares may fall from these levels as the short squeeze buyers cash out.

Sirius XM posted an in line start to a challenging 2023, as first-quarter revenue and EBITDA met FactSet consensus projections. The SiriusXM service lost 384,000 self-pay customers in the quarter, as expected since management warned last year that the pipeline in the second half of 2022 was weak. Ad revenue at Pandora held up better than expected as podcasting is still benefiting from tailwinds. Management increased full-year guidance for free cash flow and adjusted EBITDA while maintaining the revenue expectation. We are maintaining our $7.50 fair value estimate.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its satellite radio network, primarily to consumers who pay a subscription fee, often tied to a vehicle as the firm’s radios come preinstalled on a wide range of cars and trucks in the U.S. The vast majority of the stations on the SiriusXM network are proprietary, differentiating the service from streaming music and terrestrial radio.

Sirius XM posted a mixed ending to 2022 as fourth-quarter revenue came in just below and EBITDA beat FactSet consensus. The SiriusXM service added 162,000 self-pay customers in the quarter, raising the 2022 total to a gain of 384,000. While the firm posted a strong second half, the year-end total is the lowest of the last decade and more than 45% below the lockdown-affected 2020. The firm provided weak guidance for 2023 with modestly negative SiriusXM net adds as management projects soft auto sales in both the new and used channels. We expect to slightly lower our $8.25 fair value estimate after rolling our model and incorporating the updated Morningstar projections for U.S. auto sales.

Sirius XM reported a mixed third quarter, as revenue met and EBITDA missed FactSet consensus. The SiriusXM service added 138,000 self-pay customers in the quarter, swinging the 2022 total to a gain for the year. Despite posting the best net addition quarter since the fourth quarter of 2020, management kept its 2022 subscriber guidance at positive net additions and remained unwilling to provide a target. Even with the weak advertising market, the firm reiterated its financial targets for 2022, with cost-cutting offsetting the potential loss of ad revenue. We are maintaining our $8.25 FVE.

Sirius XM posted a mixed second quarter as revenue met and EBITDA missed FactSet consensus expectations. The SiriusXM service added 23,000 self-pay customers in the quarter, taking the 2022 total to a loss of 1,000 subscribers. However, management downgraded its full-year guidance to "positive" net additions from 500,000 net additions. The net loss was, as expected, due to constrained auto inventory in the United States in the second half of 2021 as churn dropped slightly to 1.5%. Despite the lower net addition guidance, the firm reiterated its financial targets for 2022, with cost-cutting expected to offset any impact from the potential loss of ad revenue. We are maintaining our narrow moat rating and $8.25 fair value estimate.

Sirius XM posted a slightly stronger-than-expected start to a challenging 2022 as revenue exceeded and EBITDA met FactSet consensus expectations. The SiriusXM service lost 25,000 self-pay customers in the quarter, in line with the weak annual guidance of only 500,000 net additions, which management reiterated. The net loss was, as expected, due to the constrained auto inventory in the U.S. in the second half of 2021 as churn remained steady at 1.6%. Management continues to expect that most of the net adds for the year will occur in the second half and has seen some improvement in the paid subscriber funnel. We are maintaining our narrow moat and our $8.25 fair value estimate.

While Sirius XM is no longer just a satellite radio service--following the 2019 purchase of Pandora--the legacy service remains the firm's crown jewel, generating three fourths of the revenue and 85% of gross profits. Due in part to the tight auto supply in the second half of 2021, which is expected to persist through the first half of this year, SiriusXM is projected to have one of its worst years in terms of net customer growth. While the market has punished the stock, we believe that the service is poised to return to growth in 2023 and beyond.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its satellite radio network, primarily to consumers who pay a subscription fee, often tied to a vehicle as the firm’s radios come preinstalled on a wide range of cars and trucks in the U.S. The vast majority of the stations on the SiriusXM network are proprietary, differentiating the service from streaming music and terrestrial radio.

Sirius XM posted a slightly stronger than expected end to 2021 as revenue met and EBITDA exceeded FactSet consensus expectations. The SiriusXM service added 55,000 self-pay customers in the fourth quarter, in line with weak guidance. Even with the anemic end to the year, the service added a very impressive 1.152 million new subscribers in 2021 despite the ongoing impact of the pandemic on commuting and travel. Management provided new customer guidance of only 500,000 for 2022, which would be the weakest net add year since Sirius and XM merged in 2010. The modest guidance is driven by the expected large drop in paid promotional subscribers due to the constrained auto inventory in the U.S. We think the number is back-half weighted with an expectation of a slowly improving inventory situation.

Sirius XM Holdings consists of two businesses: SiriusXM and Pandora. SiriusXM transmits music, talk shows, sports, and news via its two satellite radio networks, primarily to consumers in vehicles who pay a subscription fee. The firm’s radios come preinstalled on a wide range of light vehicles in the U.S. and Canada. The firm creates and operates the vast majority of the stations on its satellite radio networks. SiriusXM ended 2021 with just over 32 million self-pay customers.

Sirius XM reported a strong third quarter as revenue and EBITDA exceeded FactSet consensus expectations. The SiriusXM service added 616,000 self-pay customers in the quarter, the highest in the firm’s history. The remarkable quarter took the total over the past 12 months to a very impressive 1,504,000 despite the ongoing impact of the pandemic on commuting and travel. Despite the strong quarter, the SiriusXM net adds guidance was only increased to over 1.1 million versus 1.1 million previously. The modest guidance increase is driven by the large drop in paid promo subscribers due to the constrained auto supply chain in the U.S. We are maintaining our narrow moat and our $7.50 fair value estimate. We think the current share price offers an attractive entry point for new investors.