SiriusXM – No News, No Moves
Welcome to groundhog day. SiriusXM remains penned up in a narrow range on the verge of a move when news is announced. The news the street wants, of course, is what is happening with Liberty Media. Now, there are a lot of people that are critical of me for having to audacity to try to look at this deal in an objective manner. It is not whether I think the deal is good or bad. It is not whether I think that this company would be better without Liberty or with it. It is about assessing the situation and knowing what the parameters are.
Whether we like it or not, Liberty owns 53% of SiriusXM. Whether we like it or not, Liberty was going to make some sort of move at some point. Rather than shut down the idea of a deal, why not look at this in its proper perspective. Is getting to a deal better than not getting to a deal? In my opinion, getting to a deal is better. It will allow this company to progress in a way that it currently can not.
The technicals are showing very tight EMA’s with a slight bias to the bullish side. I think this stock can move on deal news. I think Liberty stock will move in tandem. The only news that I think that the street will view as positive is news that points to a deal happening. If a deal does not seem to be in the cards, SiriusXM will be held back by the perception that Liberty might make some other deal that is more complex and not as potentially beneficial to the company.
What we want to watch, even more than the technicals, is the news wire. We do want to understand that support is at about $3.50, and resistance sits at about $3.61. News will take this at least a dime in either direction in a speedy fashion. Anything beyond the dime will be a bit of speculation while the complexities of a proposed deal work out.
Volume
Support and Resistance
Exponential Moving Averages
Spencer-
Do you think if the ratio is not too favorable to Sirius that the street will feel relief that a deal is being done and not punish SIRI’s price too much (or cause it to rise), or do you think that the street expects a ratio more favorable to SIRI?
The deal was already slightly favorable to SiriusXM (to the tune of about $300 million) That is a point I do not think many understand. I think that the deal will sweeten very slightly. If a deal gets done, SiriusXM will do well on the news.
Thanks Spencer!
Two more questions: Where do you think the price of SIRI will go if a deal does not get done or if it is “put on hold” or takes a long time to happen?
Also, what do you think is the probability that a deal will NOT get done?
If a deal does not go through, then $4.50 is the peak for this equity in the next 12 months, but that would be a stunner to get there if a deal is not worked out.
I will say that there is a 25% chance of no deal at the moment
Thanks Spencer!