Are Poor Car Sales Priced Into Sirius XM?
As was widely expected, car sales in the U.S. were down once again in December of 2008. For most car makers, the year was full of challenges, and the road to recovery has been long and tortured. Because satellite radio relies heavily on installations from auto manufacturers, bearishness on SDARS was rather easy.
At this point, from a news perspective, just about anything that could be perceived as a negative seems to be priced into the stock. This would include slumping auto sales. Even as Ford, GM, Toyota and others are in the process of announcing yet another drop in sales, the stock of Sirius XM Radio is actually up. This would seem to indicate that the continued slump in auto sales has already been boiled into satellite radio’s stock price.
This is not to say that an auto sector turn around will deliver instantaneous upside in SDARS. There are other issues such as debt refinancing that still overhang the equity. However, a small confirmation that poor auto sales are not dragging the stock down any further gives long investors something to at least hang their hat on for the time being.
This week should bring a small amount of news, as the Consumer Electronics Show gets underway. The company, in the past, has typically announced bits of information relating to some metrics such as subscriber numbers, and perhaps a preliminary revenue number, etc. from the CES show. Whether this happens or not this year is anyone’s guess. Likely the biggest determining factor is how positive the news is, and where the company is in the search for financing. After CES, the auto show circuit will be the next on the horizon where SDARS can gain additional exposure.
Position – Long Sirius XM
Thanks for the article. No offense to Tyler but all of these posts sound like a broken record. Things aren’t good but they’re already priced into the stock and things will get better and the stock will rebound, blah, blah, blah.
Let’s keep hyping this thing because that’s all we have right now. I mean really, .12 a share.
car sales for December are being announced today. It is topical to discuss it. While nothing may have changed, it is something that an investor will want to consider.
Hyping? Where exactly do you see hyping? I have pretty much labeled this equity as ultra speculative. If I was hyping I would not be saying things such as that.
This site writes about SDARS. If something is news in the sector, chances are you will find it here. Good, Bad, or ugly.
I’m not accusing you per say of hyping just that I read many of the posts on this site by posters who really do “hype” the stock. They have every right too. And being a long in the stock I like the cheerleading but reality is reality. $.12 per share. That’s reality.
Just can’t see SIRI not getting the debt refinanced. It’s a no brainer for an investor/lender… I once worked in corp USA doing M&A as an analyst and synergies are immediately accretive to earnings (in SIRI case “non earnings”) and the surviving entity most always comes out more stable and financially stronger.
I think we have hit the bottom in this recession (save commercial real estate bust) and things are beginnning to firm up. I say it won’t show up until Sept. 09 when you can visibly feel it but i think we are going up in the elevator as opposed to down..
You run the DCF model on SIRI earnings for 9 to 24 months and the “fixed costs” aren’t going to change.. The “variable costs” are at the discretion of mgmt… Sure there are capital expenditures (i.e. satellite launches, etc..) but soon SIRI will be able to handle this with Operating Cash Flow..
Yeah, Yeah.. auto sales, auto sales… Trust that lenders will have to come up with programs to help “john q. public” buy cars and houses.. Programs that take into consideration low credit scores, short sale settlements, foreclosures, credit card charges offs, etc… because 65%+ of the USA public is facing one if not all of these issues..
Job creation is key!!! Nothing else.. Job Creation!! Without this it’s tough to say…
I still think SIRI is a winner!!!!
Do not forget MacWorld!!
The new Starplayr app may end up making an appearance on a few phones there