Auto Sector Projected To Sell 1 Million Units In August – SIRI Benefits
Early projections for the auto sector have auto sales coming in at right around the 1 million magic number that SiriusBuzz has established as the monthly sales figure that allows Sirius XM to report good metrics across the board. In Q2 the auto industry averaged about 1 million cars sold per month and Sirius XM was able to report not only great subscriber numbers, but great financial numbers as well. July auto sales bested that 1 million mark , and it now looks as if August will as well.
The caution Sirius XM investors need to be aware of is that the auto sector news surrounding August 2010 will be in comparison to August of 2009 when the auto industry saw a big sales spike because of the cash for clunkers program. What I am noticing is a mid month push by several auto makers to advertise their 0% financing and model year end specials. For many auto companies, maintaining positive year over year comparisons is important, and it seems that some makers do not want to have a dip in their numbers. In addition, GM is anticipating a Fall IPO, and boasting good sales number would be a positive for that effort.
Some auto sector analysts are already projecting sales for August to be at just over a million units with a SAAR of 11.8 million. Typically the final week of any month is where the sales push heightens. At this point, any sales number above 950,000 should be viewed as a positive for satellite radio investors. That does not mean that the release of August sales figures will send SIRI an immediate spike, but it will confirm that the company could have a bullish Q3 in terms of subscribers as well as financial metrics.
Sirius XM has proven that they have found a sweet spot in satellite radio penetration, improved churn, and done a fantastic job of increasing their take rate even in a depressed economy. The combination of Sirius XM’s efforts with a natural progression in OEM sales should give investors as well as the street more confidence in the company. Despite demonstrating great metrics SIRI finds itself trading below $1.00 again, and remaining in a trading range between $0.90 and $1.10. As the positives continue to pile up, it should only be a matter of time before SIRI can exit the sub $1.00 range and begin to appreciate.
Position – Long Sirius XM Radio
“As the auto inductry goes, so does satellite radio.”
We all know what happens when the auto industry goes on their back. It is a welcomed sight to see the auto inductry coming back to life. While Sirius is still trading under $1 it because that it hasn’t been “rediscovered” by the cash hoarding trading public. When a couple big Wall St. trading types finally make a statement along the lines that there’s money to be made with Sirius then we will see the the 20% daily increase along the lines of the similar daily drops that we witnessed a couple years ago. I think of it as the herd mentality. It just takes some small thing to get the herd to start moving radpidly. Then all hell breaks loose.
The problem is that we have had many great news for SIRI paradoxically the stock has remained in a trading range for the last few months, I can not think of anything else that can help it breakout, maybe resigning Howard for less money!
It’s the economy stupid (me). Unless we tank, as in the 30′s (which I do not see happening), all those positives will take over. A real biggy would be getting those people who don’t want to pay for something that they can get for free (or practically free), to come on board. With other services having to charge I can see that happening more and more.
Mel said 11 million is good metrics. 12 million is a bonus. SP does not reflect this. Continued stock manipulation is killing shareholders.
The year over year OEM numbers are sort of irrelevant to Sirius — its the absolutes that matter. Besides the year over year SAAR will look even better in September because the payback from August last year and it will be roughly a neutral effect for the 3rd Q in total.
I see big incentives through September to clear out old inventory for 2010 and make room. Also, we have Labor day coming up to get a big kick start on Sept. Looks like another great quarter for Sirius regardless of economy. We just need to hope the big $ finally takes notice and pushes this stock above 1.10 at least.