After a nice pop on good volume Friday, SiriusXM retraced a bit today. This was not unexpected and the key was that the equity stayed above the $3.15 level. While we oft do not like to see an equity dip, it is actually a healthy thing. Running too fast is far more unstable than building up on a strong base. The conference call is scheduled for tomorrow and for all intents and purposes most of the news that will be delivered is expected. I do anticipate the company beating the street because of the NOL's and that should generate some pop.
The other news we are now digesting is the tender offer for the 7% notes. The company is actually offering up a decent premium and this could serve well to get rid of the toxic debt once and for all. It is actually quite possible that the company replace the $550 million in debt at some point in the coming months with proceeds being used to retire more shares. Investors need to bear in mind that the potential cost to do this tender offer is between $80 million and $90 million and that hit will take place in Q1 of this year. This is important because it can knock the EPS down by a penny and a half. In addition we will see dilution of some 320 million shares. Overall the getting rid of the toxic debt is good. It will actually save the company about $70 million in interest payments over the next two years. That will help subsequent quarters.
Auto Sales were good as well coming in at 1.046 million. Stay tuned for an article covering that.
The volume today was moderate. I am not terribly concerned about the price action as long as this equity can remain above $3.15 or so. Tomorrow we will get the first real foundation laid for 2013. I expect some heavy trading tomorrow. $3.25 seems to be a pretty compelling point. If the call goes well and the headlines are good we can see this equity run a bit above $3.25. The more volume we see above $3.25 the more importance that level will have moving forward.
Support and Resistance
There are a few changes in this chart, but the story remains essentially the same. Passing $3.20 with any strength or authority is a small challenge. Holding the line at $3.15 is just as important. The issue at hand is where the foundation will be. I am comfortable with it at $3.15, but $3.20 to $3.25 would be nice to see. There are many things that can cause volatility in the next month. Watch closely.
Exponential Moving Averages
All green. All bullish. We even have the 50 day EMA at $3.00 now! That being said, we need to see this equity hold the upward line or caution flags could emerge.
Key levels are $3.15 and $3.20. The call will set the tone. I suspect that the equity can pop some, but the flavor of the call has to be right for a meaningful move.