SiriusXM (NASDAQ:SIRI) has been pumping out subscribers in 2012 despite what is clearly ultra conservative subscriber guidance. At the halfway point of 2012 SiriusXM already had boasted over 1 million net additions, less than 600,000 shy of its guidance with 6 months to go! With August auto sales poised to come in at very impressive levels, it will be difficult, if not laughable for SiriusXM to keep current guidance in place.
Just a week ago August was already looking good for auto sales, but the last week has seen even more improvement according too Edmunds and my other auto sector sources. In fact, it is looking like the auto sector may bring in numbers close to 1.3 million and a SAAR of 14.5 million. Both metrics are numbers that we have not seen in a few months! It seems with this equity that great timing has become yet another catalyst. We were all looking forward to positive momentum in 2012. It is great when the biggest contributor to the subscriber picture, the OEM channel, is hitting on all cylinders!
If August finishes out strongly, we have the very real potential of some compelling auto sector headlines right after this weekend. It was only about a week ago that I hinted that Mel Karmazin may raise subscriber guidance earlier than would normally be anticipated, and I am now even more bullish on that happening.
One reason is that the current guidance is simply too low. The second reason is that SiriusXM has been on a PR campaign lately that seems designed to bolster the share price of the equity. Bolstering the share price has a few impacts. It lets Karmazin argue that shareholders indeed got a premium because Liberty had a protracted buyout process during which the company performed well. It also increases the chances that the Sirius XM board can garner a better deal at the negotiating table. These are fundamental reasons why I see guidance being raised early. Add to that a very positive August and it almost become difficult for SiriusXM to wait until early October to make the announcement!
At this point look for August Auto sales to be 1.26 to 1.3 million. No matter how you slice August auto sales, the impact for SiriusXM means subscribers, and that translates to revenue