Sirius XM stock undervalued with potential for growth through ad-driven subscriptions and cost-cutting measures.

From Yahoo Finance: 2025-04-18 03:14:00

Sirius XM Holdings (NASDAQ: SIRI) has seen a 10% drop in shares since the beginning of 2025. Despite this, metrics suggest it may be a great buy. The company’s revenue is mainly from subscriptions and ads, with a peak of 34.91 million subscribers in 2019 and revenue peaking at $9 billion in 2022.

CEO Jennifer Witz outlined a strategy for ad-driven subscriptions during the most recent quarterly conference call. Ad-supported plans could attract cost-conscious customers and potentially recapture lost subscribers. The stock’s low valuation, with a PE ratio of just 8, presents an opportunity for investors looking for a bargain in the market.

With a dividend yield of 5.2% and trading at just 8 times earnings, Sirius XM stock is significantly undervalued compared to the S&P 500. The company’s turnaround story hinges on reversing negative trends in subscribers, revenue growth, and cash flows, which have declined to around $1 billion from over $1.5 billion in free cash flow.

Investing in Sirius XM requires belief in two potential scenarios: improved capital allocation or successful turnaround efforts. The stock’s low valuation reflects past poor performance, but if the company can reverse its fortunes, there is significant upside potential for investors willing to take a contrarian bet.

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Read more: 2 Reasons to Buy Sirius XM Stock Like There’s No Tomorrow