Why Is Sirius XM Stock Going Down?
Let me answer this question, before you ask. A lot of people are under the impression that SiriusBuzz is some sort of Sirius XM stock pumping site. Nothing could be further from the truth. In fact, I recently suggested to all our readers that they should put stop losses in at 1.20-1.24 as the stock had broken yet another bottom. To those that listened, congratulations!
To those that did not and want to know what happened today, it can be summed up simply. Mel Karmazin, in my humble opinion, gave the worst speech of his life. Despite a lot of good news coming forth from the conference, Mel made a few statements that would have been better kept to himself.
When asked about financing of the 2009 converts Mel initially was adamant that no dilution would occur. He offered up an exceptional plan that outlined the company’s ability to use cash on hand together with bank loans. Later however, he went a little farther into detail, making the statement that he hopes he does not have to lend the company money out of his own pocket.
Excuse me? Mel just told Wall Street that he believes in Sirius XM so much, that even he does not want to lend the company money! How then can he expect a bank to do the same? A slip of the tongue? An accidental joke gone astray? Absolutely, but the effects were seen in the stock price depreciation today.
The other huge mistake was reporting low-ball estimates so low for 2009, that most analysts will have to lower their forecasts. Mel might as well have said not to bother to buy the stock until 2010, because he was so conservative with the subscriber estimates for the year, that he inadvertently lowered guidance.
Of course Sirius XM will sign more than 2 million subscribers next year, but Wall Street can only go on the data provided by the CEO of the company. Mel in effect stated that the company would see ZERO subscriber growth in 2009. In fact, his estimate for 2009 will be less than the expected total of 2008. All this on the heels of an exceptional presentation outlining increases in OEM penetration rates.
Another mistake? Of course. Any idiot could see that. The problem is there are not that many idiots on Wall Street. When Mark Wienkes and Jim Cramer get a hold of this, there will be hell to pay.
Disclosure: No Position
investor…
That’s the really sad part. The current run rate is 2.2 million by my estimates. That does not include any new offerings that may contribute to growth and takes no account for increased penetration rates. That’s just the status quo.
Everyone knew he low balled the 400 million in synergies. They upped them slightly today…duh!
Mark my words. They will add between 2.5 – 3.0 million subs next year.
His low-ball tactics are only helping to kill the stock.
Scot here. I’d like to hear how shareholders feel who previously owned XM sat radio stock before the merger with Sirius. They watched their pre-merger share price drop from nearly $30 to around $12. And now, their shares in a combined SiriusXM are worth a buck nothing. Does anybody out there really know what the hell is going on with this company?
And in a final closing thought, is this company on the verge of a complete meltdown where the doors will be shackled shut with the shareholders left holding an empty bag?
Scot’s Slant
I laugh at the sucker who sells this for cheap. It makes me wonder what orbitcast really knows about this company. Your credibility is being reduced to indecisive pumper dumpers.
I correct myself, not orbitcast — siriusbuzz.
Funny how Brandon sells and now all his comments are negative. You got to be kidding me right??
One things for sure, the drama surrounding this stock is unparalleled.
With yet another drop in the pps, I am tempted yet again to ponder selling and buying back in later.
I’ve contemplated this with each huge drop since the merger approval, and each time decided not to rationalizing “IT CAN’T POSSIBLY GO LOWER!”
And yet…it has gone lower each and every time.
Selling now and watching from the sidelines as it possibly drops below a dollar would be a small victory at this point.
Then I could ponder getting back in after a wait and see period.
Don’t get me wrong, I still believe in the long term value of this stock…but
… the thought of being stuck in this stock as it drops below $1 and stays there well into next year is just brutal.
Then again with my luck, soon as I sell Mel will refinance with better conditions, and we will get our first pop in ages.
LOL.
Wow I Am a small time investor>I bought some bank stock 8 weeks ago this morning my stock is up 87% I know what i’m dong when it comes.
to doing my investing (I do my home work every day)
I beleive that sirius will start showing a profit as soon as the stock holders demand accountability from managment.
In all my research I find the only thing holding this company down is the management taking on stupid programing like Horward Stern(what a bad investment for Sirius) They need to figure out how to dump him & just pay the price upfront, then at this point just maybe they will start getting more investers & better programing.
I own 4 XM radios I think XM management was way way better than Sirius.
I Am buying 1000 shares today & more next week because I think the managment will be replaced sooner than you think. BUY BUY BUY