Every quarter there are SiriusXM investors, myself included, that try to determine the number of net subscriber additions the company will have. Some just throw out a number while others dig into the issue by looking at data such as auto sales, auto production, used cars sales, and other factors. There is no exact science, but it is always interesting to see what people come up with.
I decided to look at the issue in a little bit of a different way as we approach the mid point of the quarter. The idea here is not to do a detailed projection, but rather a range of possibilities. Think of this as some back of the napkin math. What I found was actually quite interesting. I looked at the net subscriber additions as they relate to new car sales. In doing this a pattern developed. Essentially percentage alternates between low and high. In other words, quarters with low percentages are always followed by a quarter with higher percentages and visa-versa.
If history holds true then we are set up for a quarter at the lower end of the spectrum for Q1 of 2013. In the chart I pulled the low end percentage we saw in the year 2012 at 11.66% and applied it to projected Q1 auto sales of 3,700,000. I then pulled the average of the last two years as well as the peak of 2012. What you will see is a range of NET subscriber additions between 431,420 and 605,000.
In all likelihood we should come in somewhere between the low and the mid range. Splitting the difference we are looking at projected NET additions somewhere in the neighborhood of 467,000. It will be interesting to see how this plays out and how it aligns with the various models people use.