SiriusXM has been pretty much treading water. There are many bullish signals in the technicals, but the street seems to simply be waiting on the call before making any big moves. The equity has been uncomfortably trading in the $3.40's for quite some time. A good call will allow the equity to move up, but a ho-hum call could see this equity testing the $3.20's again. In my opinion it all rests on not only the content of the quarterly call, but the tenor of it as well.
The street is looking for SiriusXM to post a 2 cent profit on revenue of just over $1 billion. If BOTH of these metrics can be beat, the equity goes up. If the EPS is met and the revenue misses, the equity, in my opinion, will go down. The key driver here is revenue. It is what is scaring the street. The street seems to be a bit worried about the growth curve flattening out a bit. Beating revenue is the key with this call.
Other metrics we used to watch are pretty much secondary. The company has shifted how subscribers are counted, has changed the information we are given on gross subscriber additions, and wants people to focus on self paying subscriber growth. These are all well and good, but frankly the street does not really know what the company feels is important anymore. It has analysts struggling to place value in what could be critical areas. I myself have been trying to get a pulse on what the street is looking for and it is a challenge.
One year ago the company had revenue of $940 million. Last quarter the revenue was at $997 million. Can the company crack $1 billion and deliver the $1.02 billion that the street is looking for? I believe that it can, but the main question is by how much. Churn, ARPU, SAC, and other metrics that used to be key are taking a back seat to revenue with this call. The street wants to believe that top-line growth is still a story here. This call will give us an indication of whether or not that is the case.
SiriusXM has announced a $2 billion addition to the share buyback program. That means that the total for the program is now $6 billion. That is a substantial amount no matter how you look at it. As yet we do not know if Liberty will participate. My inclination is that it will, with announcements pending when the timing is better. Look for Liberty to strike a deal when the equity has strength.
The volume is decent. Not to high, not to low. The volume today will be interesting as investors jockey for position prior to the call. The support and resistance story remains about the same. We have support at $3.41, $3.37, and $3.32. In my opinion it is imperative that this equity stay out of the $3.30's. Resistance is at $3.47 and again at $3.61. If this equity can break into the $3.50's, I would consider it a major positive.
The EMA's are very tight. We have one caution flag. We need to stay at $3.45 or better to remove short term bearish signals.
Support and Resistance
Exponential Moving Averages