Sirius XM – Supply And Demand
It’s all about supply and demand. Always has been, always will be. That is true for Sirius XM stock as well. The recent sell off in SIRI shares can be attributed to supply. The abundance of available shares being sold has met with minimal buy side pressure. This has dropped the price.
A company through its effectiveness can only help to increase or decrease demand of its shares. The example staring us in the face is the recent conference call by Mel Karmazin. Unfortunately, despite many positives, the call helped to increase supply and weaken demand. I don’t think it takes a rocket scientist, or in this case an accountant, to see that the intention of the 2009, 2.0 million subscriber addition estimate by Mel was in fact just a low ball estimate, without any basis of fact. Mel even stated that the company was just basically throwing the number out there. The street however, focused its attention on that number.
Some attribute the decline to debt issues coming due next year, but the company did in fact lay out an exceptional plan to deal with the debt, without diluting shareholders. That should be looked on as a positive, yet the street is obviously nervous. Adding to that nervousness, is a sub 1.00 stock price.
What can be done now? There is only one answer. The company must increase demand for its stock, by ignoring the stock. It can only do that by executing its business plan, which puts the Q4 Christmas selling season on center stage. Q4 is historically the strongest quarter for satellite radio and with the new “a la carte” packages and “best of” programming offers being launched this quarter, Q4 looks promising.
This is a new company, only 40+ days old and it should be viewed as such. It is in this quarter that the company has the best chance of increasing demand for its stock, and increasing guidance in future calls.
Investors now have an opportunity to own stock in a company, with 2-3 BILLION dollars in annual sales and GROWING, for under a buck. Are you kidding me? Oil prices are plummeting and lenders have become more liquid in recent days which should boost car sales. The potential for upside surprises from the company has never been better. I think everyone can clearly see that. If we are all aware that the estimates given for 2009 are a low-ball figure, why then place so much importance on the number?
If the company can achieve its desired cost cutting and execute on sales, the stock will rise like a phoenix from the ashes. The growth of the company is real despite many headwinds. As Jim Cramer admitted at the prompting of Mel Karmazin, there is no other stock in the sector he’d rather own. The stock will catch up, but the days of day-trading it are coming to an end, and that is good for long term investors.
Positon: Long SIRI
I am still in for 4k shares but am very disappointed with how this stock sunk.
Can someone explain cost averaging to me please. I am still fairly new and am thinking of buying more at the current price but it worries me because of the its’past history.
Thanks in advance
Heavy
Sirius Roadkill, To show this I will give you an example that even you should be able to get. I first bought in SIRI at a average .97 cents about 5 years ago I cant remember if they were even getting subs yet, when I bought my first shares. Now if I thought SIRI was a good spec stock then before they had even 100,000 subs, and competing against XMSR. When I turned about a 35,000 dollar investment into around 120,000 return. So yes, I dont think the PPS is as high as were it should be, now that they have 8.9 million subs (SIRI by themselves) and just bought the only direct and main competetion they had to deal with back then, and now. I know the next question you are going to ask. So what about all the debt they are carry now compared to then. The answer is simple to semiintelligent people, the debt to revenue ratio is not even close to were it was before.
sorry John . . . I knew “163888” and you sir are no “163888”
but good news John, Trump just canceled so Mel has room for a 4th . . . bring the titanium; supposed to be pretty windy tomorrow.
p.s. don’t feel too bad about your losses . . . they’ll be a real BIG announcement on October 6th; the SP should shoot straight up to $5.00 (shhhh, don’t tell anybody though . . . I got that one from Tony Wible on the QT if ya know what I mean; mum’s the word John)
John–Your nothing but a rude extreme liar. You are not now or have ever been associated with Seeking Alpha. They are a class act and you are not.
Seeking Alpha would never let a moran who puts down others, work for them. Please crawl back inside your world of make believe.
Sirius Roadkill, Well you just lost the little credibility you may have had with some people about knowing anything. Anyone with even a little common sense would be able to see that I am both. Forget the fact that I had said so well before I was taken off Seeking Alpha. One only has to look at the post at both sites to see the same things were said on both by john here and 163888 there. I will tell you why I was stuck with 163888, after trying john and JT (that is what I used at Barrons and the WSJ online) they were rejected (already being used) so I just stop trying, it was just not that important.
Heavy, I am a poster there you jackass, I dont even work and if I did not enjoy making idiots such as you, VicDave, and Sirius Roadkill look like idiots, I would not even post. As for Seeking Alpha being a class act they took me off because VicDave complained that I was reposting his words to show how he is lying. If they were a class act they would want the truth out, right.
Heavy . . . please check with a reputable broker before making any investment decision and be skeptical of hype about any new announcements or technical analysis that promotes a big “break-out”
As a matter of public record, both Sirius and XM individually promised investors that only 4 million subscribers were required to be profitable. The combined entity has nearly 20 million subscribers and yet today is still not profitable.
Trying to dollar-cost-average this stock would be like trying to catch a falling knife. Unless the money you are investing is entirely discretionary and you are fully prepared to lose your entire position, tacking-on additional shares is not recommended.
huh? what’s that John? oh, wait . . . hold on a minute . . . lemme take these i-pod headphones off. . . ok, that’s a little better
no-no. wait a minute . . . still can’t hear ya . . . lemme just reach over and turn down the volume on Pandora.
Nope, no good. Still can’t hear ya. Oh well, gotta run . . . off to Seeking Alpha
First, I dont ever recall ether giving a specific subscriber number needed to become profitable. So if it is as you say a matter of public record please link to it.
Now as for your last comment. You once again show you have no clue. What kind of content do you get with a I pod, get baseball on that thing, I guess that gos for Pandora also. I never will understand why people like yourself are willing to pay 4 times as much and have to keep switching things to get the same content for 75% less of what you are paying and never have to switch out a device. By the way I hope you dont like Pandora that much because they are saying they wont be in business for much longer.
Hi John, I was reading the article about Pandora and their predicament with paying the internet royalties. They were saying if they had to pay the current rates offered in their negotiations the doors will be closed.
‘Roadkill is a piece of work. No investment in the company just a lot of taunting. Everywhere he goes he leaves a pile to clean up.
Yesterday when I was young . . . doot-do-do-do-do-hum-hum-hum-hum-hum . . . .
Satellite radio transmits need for funds
By Earle Eldridge, USA TODAY
The USA’s two competing satellite radio companies say they need big cash infusions to continue operating beyond next year.
Beaming out a broadcast: XM Satellite Radio began broadcasting in September 2001 and has about 137,000 subscribers.
XM Satellite Radio
Both XM Satellite Radio and Sirius Satellite Radio offer 100 channels of music, news sports, talk and entertainment broadcast channels, available nationwide, for a monthly fee. All the Sirius channels and many of XM’s are commercial free.
But so far, neither has attracted enough subscribers to break even.
The key, the companies and analysts say, is for the satellite radio receivers to be widely available as a factory-installed option in cars. That won’t happen until next year.
In the meantime, both companies need to raise cash. In its second-quarter earnings report, Sirius said it has $327 million cash on hand, enough to keep running through the second quarter of 2003. But it needs $300 million to continue operating beyond that. XM says it has about $157 million in cash to continue operating through the first quarter. XM Chief Executive Hugh Panero says his company has met with its partners, including General Motors, to discuss possible financial help.
Despite the current cash crunch, analysts predict satellite radio will survive. “Once they shore up their financial strength, I think investors will come on board, and the public will begin to notice satellite radio,” says Robert Peck, an analyst with Bear Stearns.
The satellite radio networks feature programming that ranges from sex talk to gospel music, from sports to kids’ shows. They have tapped several entertainment and news sources for programming. USA TODAY has a channel on XM.
Subscribers pay a monthly fee — $9.99 for XM, $12.95 for Sirius. They also must have a radio receiver capable of receiving a satellite signal. The receivers, available from electronics retailers, currently cost at least $100.
XM beat Sirius to market, giving it a jump on subscribers. It began broadcasting in September 2001 and has about 137,000 subscribers. It expects to have 350,000 by the end of the year. The company says it needs 4 million subscribers to become profitable, and it expects to reach that number by the end of 2004.
Sirius began broadcasting in February and has about 7,000 subscribers. It cut its subscriber target to 75,000 by the end of the year from 100,000 projected earlier. The company says it needs 2 million subscribers to become profitable and expects to reach that goal by 2005.
Getting automakers fully behind satellite radio will determine if the technology succeeds or not, analysts say. That commitment includes having satellite radios comfortably integrated with other radio controls and installed at the factory.
While GM won’t discuss possible financial aid for XM, it is, so far, the only automaker to announce plans for factory-installed radios. Several other automakers say buyers will be able to get the radios installed by dealers.
GM says factory-installed XM radio receivers will be an option in 25 of its 2003 models, representing 57% of its vehicle production. And buyers who finance their car through General Motors Acceptance Corp. can get their monthly subscriber fee included in their monthly car payment.
Since November, Cadillac has offered XM satellite radio on its DeVille and Seville models. The luxury division likely will offer XM as standard equipment with free one-year service on some Cadillac models, says Rick Lee, director of satellite radio service for GM.
For other GM brands, XM will be a $325 option — plus the monthly fee — although each GM brand may offer deals, Lee says.
“As we look at lowering the cost to consumers, that’s when it will grow in popularity,” he says.
“The fact that you’ve got someone like GM, a strong, prestigious company behind you, is a real asset,” says Peck of Bear Stearns. “I wouldn’t be surprised if GM stepped up and offered some financial assistance to XM.”
Among other automakers:
DaimlerChrysler has announced that the 2003 Chrysler 300M will get a factory-installed Sirius radio. Dealers will install the satellite radios in other cars.
Chrysler officials say they are not worried about the cash needs of Sirius.
“Right now, we are confident in Sirius’ plans to have funding to continue their operations,” says Mary Beth Halprin, manager of e-business and technology communications for Chrysler. “They have certainly been in tough times, but we don’t have any concerns about them in terms of their viability.”
Ford Motor will announce within the next seven months which Ford models will get Sirius radios, says Said Deep, a Ford spokesman.
Nissan says it will offer consumers a choice of either XM or Sirius.
Wall Street has punished Sirius for reducing its subscriber projections and not yet having an automaker committed to factory installation of its receivers. Its stock price closed as high as $13.05 in January but recently fell as low as $1.10. It closed Monday at $1.27, up 10 cents.
But investors haven’t been kind to XM, either. Its stock price has fallen from as high as $20.68 a share in January to as low as $2.63. XM’s shares closed Monday at $4.03, up 4 cents.
“XM is further along on its business plan,” says John Stone, an analyst with Ladenburg Thalmann. “The good news is that both companies have raised about 70% of the money they needed to launch the business.”
John, you requested it . . . it is my pleasure to grant it . . .
http://www.usatoday.com/money/.....adio_x.htm
http://investor.sirius.com/Edg.....;SID=02-00
lest anyone should forget . . . take this little gem out for a spin; restructure or else!
history repeating itself?
deja vu all over again?
http://investor.sirius.com/Edg.....;SID=02-00
a little history lesson
p.s. I see I made a little mistake . . . it was XM that said they needed 4m subs for profitability. Sirius actually said they needed only TWO MILLION subs. I stand corrected.
Anything else I can help ya out with John?
You can help me out roadkill.
First, the comments you are making have nothing to do with the article. This is not seeking alpha or the yahoo board.
Everytime you post a message, I get an e-mail alert. I get upset with checking my e-mail when I find a useless post has been made.
Stop attacking others and stick to the topic and I’ll have no problem with your “diverse” opinion.
That was probably before they started signing all of the talent they have now, i.e. stern, oprah, etc. The extra programming is worth the extra cost in my opinion.
Brandon, I appreciate your frustration and will endeavor to confine all future remarks to the article at hand.
Some of my so called “attacks,” however, are merely rebuttal . . . and note that I have not used profanity or a confrontational tone in challenging the opinions of others.
I appreciate your willingness to air-out divergent opinions; I did not mean to imply that you were in any way among those trying to sanitize any content posted here.
My apologies . . .
I forget who above asked about averaging down. Say you do three separate buys over a month as the SP declines from 2 to 1 per share:
Buy #1 = limit buy of 5000 shares at 2 = (5000 / total shares of 5000) = 1 * 2 = SP of 2.
Buy #2 = limit buy of 10000 at 1.5 = (10000 / 15000) = .67 * 1.5 = (1.01 + 2) / 2 = averaged down SP of 1.51.
Buy #3 = limit buy of 15000 shares at 1 = (15000 / total shares of 30000) = .50 * 1 = (.50 + 1.01 + 2) / 3 = further averaged down SP of 1.17.
Ditto for subsequent buys as the current SP continues to decline, but dividing by 4 for buy #4, by 5 for buy #5, etc.
In the example the trader or invester averages down 42%, from 2 to 1.17 per share.
Do not do the above as SP increases or your cost per share will increase. As current SP increases buy progressively fewer shares to add to your position. I built a little tool for my system in Excel that takes all the work out of keeping up with averaging down.
(For the more advanced SiriusBuzz contributers, please pardon the lesson above. Please also correct any error that I may have made.)
My post above is for Heavy.
Also, Heavy, in the example where I say “SP of 2” and “SP of 1.51” and “SP of 1.17” I mean the buyer’s cost per share. Should have clarified that.
Hey PM – Some of the most successful traders out there actually “average up”. If you are able to buy into something that is trending up you will be making money on every single share you own so obviously the more you own the more money you make. You of course won’t be making as much of a percentage gain on the higher priced stuff but none the less a gain.
GetStraight, good point. I was just sharing a basic. The more the pyramid gets inverted upward, though, the greater the risk is things go sour. As John D. Markman (of MSN StockScouter and HiMarq fame), quoting swing trader Richard Rhodes, advises: “When adding to a trade, add only 1/4 to 1/5 as much as currently held … That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50 percent corrections without touching your average price.” Risk control 101, according to Bert Dohman (veteran swing trader and founder of LA based Dohmen Capital Group: [If a long trade is working out and price is ascending,] “add to the position in amounts that are always incrementally smaller than the initial purchase … so you have more more money invested at the top than at the bottom. Dohman avoids building an inverted pyramid in a position, in which incrementally larger amounts of money are added to a position as it succeeds. Why? “A small decline near the top can wire out all of your profits.” See Markman’s book “Swing Trading” for more reasons why adding more shares while averaging down is good and adding progressively fewer shares can be as good or better when building a position when price keeps rising. Of course, to each his/her own as a trader.
“wire” above should be wipe. Damn typos…
Another correction to my reply to Get Straight: “1/5” should be “1/5” I need someone to type for me….
Damn … “1/5” should be “1/2” …. sorry ’bout that.
Sirius Roadkill, thanks that was a interesting article. I see they did make projections that they could not make. They found out later that if they were going to have even a chance at getting the subscribers that they needed they were going to have to offer more then music and NPR. That they found out cost money. I will leave you with one last note on this, is it any wonder both of those CEOs are not running ether of the companies anymore.
Thanks for the great response PM.