Sirius XM Declines 54% YTD: How Should You Play the Stock?

Sirius XM SIRI shares have dipped by 54.4% year to date (YTD), underperforming the Zacks Consumer Discretionary Sector’s appreciation of 15.6%.Sirius XM also lagged the Zacks Broadcast Radio and Television Industry and its peers like Apple AAPL, FOX FOX and Spotify SPOT. While the industry has appreciated 53.4%, shares of Spotify, Fox and Apple have gained 167.4%, 59.2% and 26.2%, respectively. SIRI shares’ underperformance can be attributed to tough competition in music streaming market, decline in self-pay subscribers and advertisement revenues, and increase in royalty expenses, high programming and content costs. For the third quarter of 2024, SIRI’s revenues declined 4.4% year over year to $2.17 billion. EBITDA decreased 7.23% year over year to $693 million due to effective cost management, leading to lower costs of services, personnel-related costs and administrative expenses.Sirius XM Holdings Inc. Price and Consensus Sirius XM Holdings Inc. price-consensus-chart | Sirius XM Holdings Inc. QuoteHowever, SIRI aims to improve its top line by focusing on three strategies: enhancing its subscription base, increasing advertising revenue and continuously optimizing all aspects of its business.SIRI’s Efforts to Increase Subscriber Base Drive Top LineSIRI announced an exclusive agreement with Alex Cooper’s Unwell, a podcast that includes Call Her Daddy, enabling the company’s market reach to increase among Millennials and GenZ. The company also inked an agreement with ESPN+ to give extended trials of services to dedicated users.Sirius XM has recently enhanced its subscription plan by adding clear pricing models, tiered plans based on interest, unified offer strategy and simplified transaction process to increase subscriber base. At the end of the third quarter of 2024, SIRI recorded 14K net additions to self-pay customers, an increase of 110K from the year ago quarter.Further, the strong performance of news and politics programming is driving the top line by increasing not only listener numbers but also hours listened. SIRI’s launch of a show by former UN Ambassador Nikki Haley and Dylan Douglas strengthens the company’s position in Gen Z customers.It has also announced enhancements to the SIRI application to improve user experience and enhance discovery. The new feature will allow in car subscribers to download as well as sign into the app from vehicle display increasing customer engagement.SIRI has made significant inroads into the electric vehicle market by introducing new in-car pricing and packaging plans. It announced a wholesale three-year SiriusXM subscription with Toyota, increasing the OEM participant count to nine.Sirius’s free ad-supported version provides an opportunity to increase trials and retain listeners. Further, the introduction of premium interactive product bundles, in car and in app, bodes well for investors as it enables the company to leverage its portfolio to expand its core business.Advertising revenues, in particular, is a strategic focus area as it leverages technologies to enable market-leading solutions to drive unique content and distribution channels to provide services to its 33.15 million subscribers. SIRI’s agreement with LiveRamp will aid the company in enhancing its targeting and measurement efforts.Will SIRIUS XM’s Merger and Split-off Benefit Investors?SIRI announced that it has completed its split off with Liberty Media on Sept. 9. It has merged the wholly owned subsidiary of New Sirius into Sirius XM Inc., reducing its outstanding share count from 3 billion to 339 million shares but maintaining its total market value. New Sirius will trade as an independent public company, simplifying the ownership structure of Sirius XM. SIRI operates in a highly fragmented audio entertainment industry and this transaction will help in creating value for investors by improving trading liquidity and gaining access to a bigger investor base and greater opportunity for index inclusion. Even though the company shares have declined YTD due to a change in the overall nature of the entertainment industry, SIRI has a loyal customer base. Sirius aims to differentiate itself with curated content that is available on a stand-alone mobile app separate from the in-vehicle satellite-radio product.SIRI’s Earnings Estimate GloomyThe Zacks Consensus Earnings Estimate for both the fourth quarter of 2024 and the full year of 2024 has shown a decreasing trend over the past 30 days.The Zacks Consensus Estimate for fourth-quarter 2024 earnings is currently pegged at 61 cents per share, down 4 cents over the past 30 days, and indicating a 32.22% decline from the year-ago quarter.The consensus mark for fourth-quarter 2024 revenues is pegged at $2.17 billion, indicating year-over-year decline of 4.97%. For the full year of 2024, SIRI expects its total revenues to be $8.675 billion, adjusted EBITDA to be $2.7 billion and free cash flow of $1 billion.The consensus mark for loss is pegged at $6.03 per share, indicating a decline of 288.44% from the year ago quarter.For 2024, the Zacks Consensus Estimate for revenues is pegged at $8.68 billion, indicating a year-over-year decline of 2.99%.  SIRI’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing in the remaining one, the average negative surprise being 41.69%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.SIRI Stretched Valuation Concern for InvestorsSirius shares are currently overvalued, as suggested by a Value Score of C. Sirius XM currently has a Zacks Rank #3 (Hold), which implies that investors may wait for a better entry point to accumulate SIRI shares.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Sirius XM Holdings Inc. (SIRI): Free Stock Analysis Report Fox Corporation (FOX): Free Stock Analysis Report Spotify Technology (SPOT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks