Sirius XM stock has dropped 60% due to challenges, with potential to fall further

From Nasdaq: 2025-01-14 01:29:18

Sirius XM Holdings stock (NASDAQ: SIRI) has dropped by 60% this year due to challenges in the automotive industry and advertising trends. Analysts believe the stock is undervalued at $27 per share, with potential for growth if the company focuses on content. However, there are risks, and the stock could fall further to $10 per share.

Sirius XM’s revenue fell by 2% in the first nine months of 2024, with subscriber revenue dropping by 3%. The company expects revenue to decline in 2025 after a 0.6% drop in 2023. Falling subscriber numbers and increased competition from streaming services like Spotify are key issues affecting Sirius XM’s growth prospects.

Acquiring new subscribers is a challenge for Sirius XM, especially with its partnership with Howard Stern set to expire in 2025. The company is expanding its podcast offerings, but financial concerns and a high debt load could hinder growth. Sirius XM’s revenue is projected to decline to $8.3 billion by 2026.

Sirius XM’s net margins have fluctuated in recent years, falling to 13% in 2022 and rising slightly to 14% in 2023. However, there is a possibility that margins could decline to 9% in the near term due to increased operating costs from acquiring podcasting brands and investing in subscriber additions. Sirius XM faces increased competition, potentially leading to margin erosion. Trading at $22 per share, SIRI trades at 7x 2023 earnings and 8x estimated 2025 earnings, with an expected 40% decline in net income by 2026. The stock has seen negative returns in the past 4 years, while the Trefis HQ Portfolio has outperformed the S&P 500. Despite challenges, long-term success is possible due to Sirius’ market position and expertise.

In January 2025, SIRI had a 1% return, with cumulative returns of -58% since the start of 2024. Comparatively, the S&P 500 had a 0% return in January 2025, with cumulative returns of 24% since the start of 2024. The Trefis Reinforced Value Portfolio had a 1% return in January 2025, with cumulative returns of 17% since the start of 2024.

Investors are encouraged to consider Trefis Market-Beating Portfolios for potential opportunities. The author’s views expressed do not necessarily reflect those of Nasdaq, Inc.



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