SiriusXM Showing Signs of Life Headed Into Quarterly Call
This is not the prime position to be in, but it is the hand we are dealt. SiriusXM is showing some potential signs of life headed into the quarterly call this Thursday. From a technical standpoint SiriusXM is on a bubble. If the quarterly call is well received, the company can move upward. If the call is not well received, it can burst and we see a correction down below $3.00 per share. It is really that simple.
The biggest factor here is not so much the numbers themselves, but rather how they are presented and dealt with. The biggest risk is the subscriber number. Last year Q1 delivered 453,000 subscribers. This year the number is much more likely to be 153,000 because of the GM deal. The company seemed to gloss over the change in the GM deal with the annual report. The fact that the company lost 38,000 subscribers last quarter was lost in the mix of overall annual numbers. Let’s face it. If the company is anticipating 1.2 million subscribers this year, starting off at about 200,000 will not send confidence through the street. In my opinion, the company needs to paint a picture for the street on how guidance will be met.
Tomorrows report from me will get into more of the quarterly estimates. Now to the technicals.
SiriusXM actually is in a situation that could turn the technicals more bullish if we get follow through. We saw a caution flag fall off of the EMA chart, and are on the cusp of seeing a warning flag fall off as well. It will take a close above $3.16 to get to that point.
Volume
Support and Resistance
Exponential Moving Averages
spencer what do u think the chances are the company is buying stock via forward agreements with other firms like liberty did when it began to buy up shares?
w….
I think it is between slim and none. Typically a move like that is used to be stealthy. The company has been very public about buying shares. The need to be stealthy is simply not there.
i think stealthy is exactly what they would want to do when the price is so low and they want to maximize the amount of shares they can get
Spencer,
Is it true or not true that net sub additions every Q specifically the old GM deal were always netted out from Q to Q and that the total current Qs #s from GM were not added without the previous Qs non converts being deducted. How were those non converts accounted for if they were not netted out in the subsequent Q?
See my previous posts from Friday on the other article thread.
TIA
denco….
The impact is gross additions.
100% of satellite radio equipped cars were counted as subscribers at some point in time under the old deal.
vs.
only about 40% of satellite radio equipped cars (those that convert) will be counted as subs in the new deal.
In the old deal we would have 100’s of thousands of people counted as subscribers that never have any intention of keeping the service. In the new deal we are only counting those that intend on keeping the service.
This is a quote from Q3 2013 release…
“SiriusXM had a great quarter, with the 513,000 net subscriber additions and the 373,000 self-pay net additions setting post-merger records for the third quarter.”
Gross sub additions are not part of the info that is front and center when #s are released. It is net sub additions and self pay net additions. Both of which will remain the same after the left over affects of the shift right? The only month left to convert or not to impact this Q1 post shift is September.
Denco….
Net is arrived at by subtracting deactivations from gross additions.
Let’s pretend that GM is the only company making cars with satellite radio, and they make 500 per month. Conversion rate is 40%. Churn is 2% per month.
January – 500 cars made all count – 500 total subscribers
February – 500 cars made all count – 1,000 total subscribers
March – 500 cars made all count- 1,500 total subscribers
Gross additions for the quarter 1,500 net subs 1,500
April – 500 cars made all count- 300 deactivations – 1,700 total subscribers (200 self pay)
May – 500 cars made all count – 300 deactivations – 4 churn from self pay – 1896 total subsucribers (396 self pay)
June – 500 cars made all count – 300 deactivations – 8 churn from self pay – 2,088 total subscribers (588 self pay)
Gross additions for the quarter 1,500 – deactivations and churn 912 – net subscribers 588
July – 500 cars made all count – 300 deactivations – 12 churn from self pay – 2,276 total subscribers (776 self pay)
August – 500 cars made all count – 300 deactivations – 16 churn from self pay – 2,476 total subscribers (960 self pay)
September – 500 cars made all count – 300 deactivations – 19 churn from self pay – 2,657 total subscribers (1,141 self pay)
gross additions for the quarter 1,500 – deactivations and churn 947 – net subscribers 553
October – 500 cars made NONE COUNT – 300 deactivations – 23 churn from self pay – 2,357 total subscribers (1,318 self pay)
November – 500 cars made NONE COUNT – 300 deactivations – 26 churn from self pay – 2,031 total subscribers (1,492 self pay)
December – 500 cars made NONE COUNT – 300 deactivations – 30 churn from self pay – 1,701 subscribers (1,662 self pay)
Gross additions in the quarter 0 – deactivations and churn 979 – net subscribers for quarter is (979)
January – 500 cars made NONE COUNT – 200 convert from October – 34 churn from self pay – 1,867 subscribers (1,828 self pay)
February – 500 cars made NONE COUNT – 200 convert from November – 37 churn from self pay – 2,030 subscribers (1,991 self pay)
March – 500 cars made NONE COUNT – 200 convert from December – 40 churn from self pay – 2,190 subscribers ( 2,151 self pay)
gross additions in the quarter 600 – deactivations and churn 111 – net subscribers 589
We have gone from adding 1,500 per quarter from GM to adding about 600 per quarter.
EDIT Pre Shift…..
I appreciate the breakdown Spencer….tks
That makes sense and does show an impact to gross but the net and self pay normalize which is what headline #s show and should be the important #s right? I guess what I am saying is that gross is really irrelevant as soon as the shift is washed out. Most of the impact was washed in Q4…..again tks for your input above.
The headline #s of 25.6 mn net sub adds and 21.1mn net self pay adds are the #s that will continue to remain relevant and will not be impacted from the shift after the inital wash. Now what will impact is decrease in conversion or increase in churn or vice versa which is a different story all together.
EDIT 25.6 mn total paid subs…21.1mn net self pay subs.