Sirius XM Radio is only two market closes above $1.00 away from gaining NASDAQ compliance to remain listed on the exchange. After a tough Friday, the company closed above the one dollar threshold to bring the above $1.00 streak to 8 consecutive closes. For most people, Friday was the hurdle that would prove most difficult, but instead, it looks like today is the toughest day yet.
The company has been trading below $1.00 for most of the day. Volume is high, and shares seem to be trading at a record pace. With the company’s reliance on car sales, the weak numbers anticipated for new car sales in February are not helping matters.
Sirius XM has until March 15th to trade above $1.00 for ten consecutive days. The rule is based on the bid at close, and the company has successfully remained above the target price for 8 days. If the company were to close above the $1.00 level today and tomorrow, they will have gained compliance and averted the cloud of a reverse stock split.
Mel Karmazin dealt with the issue in a conference call last week, where he stated that the company would only conduct a reverse split if forced, and that they would file for a six month extension if they did not regain compliance by March 15th.
After the company closed Friday, my own confidence that they would remain above 41.00 was bolstered. Today, the trading action seems to be a battle of those that want to see it gain compliance vs. those that want the reverse split cloud to remain in place. With only a few hours left in the trading day, it will be interesting to see how this plays out.
The company actually has one more ten day window available before March 15th, but that would require being over $1.00 at the close of business tomorrow, March 2, 2010. Shareholders have approved a reverse split for compliance. That approval expires in June.
The move that brought Sirius XM above $1.00 was a bold move on what appeared to be little news. It was almost as if the equity was being driven to regain compliance. After reporting good metrics, and offering up what appears to be profitable guidance, the $1.00 mark appears to be in danger. Who will win this test of wills? We will know within the next 48 hours.
Position – Long Sirius XM