What’s Next For Sirius Stock After A 26% Fall This Year?

Sirius XM stock (NASDAQ
NDAQ
: SIRI), a leading provider of satellite radio, has a large number of outstanding shares of around 4 billion (in 2022) which makes its stock trade at a low price in the range of around $6 to $7 levels usually. But after a 26% fall year-to-date, we believe SIRI’s short-term stock price is attractive at the current price of around $4 per share. Sirius stock had a rough start to 2023 and declined from $5.84 to $4.32 YTD, negatively impacted by headwinds in advertising and a delayed recovery in the auto sales industry. Pandora also continues to struggle to stabilize its monthly active users and total listening hours. In addition, the entire company remains heavily in debt at $9.4 billion. Despite all this, the media company benefits from a historically meager churn rate, with an implied average life for new car purchases of around five years – thanks to its solid business model. By taking advantage of the advertising reach it receives through radio, Sirius XM could likely push Pandora into podcasting for further growth opportunities. And, if we consider that SIRI stock now trades at 15x forward earnings with operating margins of 20% – the long-term price could see gains.

Notably, SIRI stock had a Sharpe Ratio of 0.0 since early 2017, which is much lower than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.