Sirius XM Is a 15-Bagger

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Sirius XM Radio (Nasdaq: SIRI) has come a long way since bottoming out at $0.05 a share in February.

In each of the past two trading days, the satellite-radio operator has seen its stock temporarily creep over the $0.75-a-share mark. It's an impressive 15-bagger for believers who bought in during the company's darkest hour.

It was going to be feast or famine in mid-February, when the company was short on dough as it was bumping up against the first of three major debt milestones. It was in negotiations with EchoStar (Nasdaq: SATS) and Liberty Capital Group (Nasdaq: LCAPA) to raise capital, but even the company was positioning its investors for a worst-case scenario.

"If these transactions are not consummated, it may be forced to file for bankruptcy protection as early as February 17, 2009," Sirius XM noted in a grim press release.

It also didn't help that one of its biggest partners -- and early investor in XM -- was on the ropes as General Motors turned to government bailouts before ultimately pulling into bankruptcy itself.

Liberty Capital made sure that Sirius XM would live to fight another day, but only after commanding interest rates as high as 15% and diluting shareholders to the tune of a 40% stake in the spared company through preferred stock.

The past few rewarding months have treated Sirius XM investors to improved cash flow projections and raising capital on better terms than it desperately succumbed to in February. The stock has responded, and in a major way.

Going from a nickel to three quarters isn't chump change, but Sirius XM would still love to see its share price tack on at least another quarter. If the premium radio provider can get its sticker price over a buck in the coming months, it will silence the need for a reverse stock split to avoid being delisted by Nasdaq.

Reverse splits aren't fatal. Beleaguered insurer AIG (NYSE: AIG) is trading well above its adjusted price after this summer's 1-for-20 reverse split. Coeur d'Alene Mines (NYSE: CDE) has also overcome a reverse split that the silver miner initiated three months ago. It's a zero-sum game, though Sirius XM bulls would prefer the stock to trade above a buck organically.

With momentum on its side, it's certainly possible. With so much of Sirius XM's enterprise value tagged to its debt, the market cap will always be volatile.

Can Sirius XM "buck" the trend? Do beer sales stop at the end of the third quarter?

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When will Sirius XM hit the $1 mark?

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 25, 2009, at 2:00 PM, dcsilver wrote:

    Please - like you didn't read my blogpost this morning before you wrote this... http://caps.fool.com/Blogs/ViewPost.aspx?bpid=248501&t=0...

  • Report this Comment On August 25, 2009, at 2:11 PM, jamf92 wrote:

    I think a HUGE benefactor to SIRI will be its app through iPhone. I have been a long time satellite radio subscriber and refuse to listen to AM/FM radio. Also, I am not very big on buying all the songs I want from online sites. I just want to hear great music without much commercial interruption and that is exactely what I get with SIRI. Now with the iPhone app I can take it with me anywhere. If that takes off I think it can help offset the downside of the auto industry until it picks back up. That way they are not so one-side dependent on where they pick up new users.

  • Report this Comment On August 25, 2009, at 2:24 PM, RAF22 wrote:

    SIRI is now trading within a framework of dominant technical strength, reflecting the positive fundamentals that have emerged for Sirius XM over the past few months. The sustained break above .60 last week completed a rounded bottom that began eleven months ago, projecting further upside potential of .55 over the next eleven months. While this is only a theoretical projection, past observations of the behavior of markets following this type of completed formation suggest a high probability of further upside testing in the weeks and months to come. SIRI is now pausing to consolidate the recent gains and this firm backing and filling should continue over the near term while the resulting mildly overbought condition is wound down. Following this phase, resumed upside testing should be seen with potential toward .90 to 1.00 around the November release of 3rd Qtr. earnings and guidance. Institutions are now committing to SIRI, as risk/reward assessments strongly favor long positions at this time. Longer term potential is indicated toward 1.25 to 1.50 over the next six months to one year and toward 4.00 over the next two years (50% retracement of the declines from December '05 to the February lows).

  • Report this Comment On August 25, 2009, at 2:27 PM, rleydon wrote:

    Can Sirius get enough new subscribers to make is the real question. With the end of the C.A.R.S. program did Sirius get a significant number of new subscribers that will keep the product after the introductory period if at all? I don't think they will and with the end of the C.A.R.S. program we can expect a slow down in new auto sales that will not help Sirius. And even with an IPhone app if they don't get more paying customer they won't make it far. In my opinion it looks like a long road to recovery for Sirius.

  • Report this Comment On August 25, 2009, at 3:17 PM, ybnvsbu wrote:

    Recovery is the key here. The stock will drop to .60 and then move forward with the anticipation that they are on the road to recovery. Apple Connect with new cars is not the only mode of gaining new subscribers nor was the C.A.R.S. program. People will swap out their AM/FM's for Sirius receivers in their cars. If Apple builds it, they will come. Did you see Apple straining in our recession?

  • Report this Comment On August 25, 2009, at 3:32 PM, matt1010101 wrote:

    Yes, the service you provide is foolish...I wouldn't even use the word "Motley." Maybe "idiots" is more appropriate.

    Sorry, I had to say it (please take away my id). I will never read another article that you post or comment on such stupidity again.

  • Report this Comment On August 25, 2009, at 3:40 PM, mikecart1 wrote:

    Another SIRI article. This site blows seriously.

  • Report this Comment On August 25, 2009, at 3:57 PM, Recondo72 wrote:

    As long as SiriusFM (oops... I ment SiriusXM) persists in its gutting of what ONCE was a great medium by narrowing playlists,crappy substitute programming and NOT listening to its CORE subscribers, I don't see a lot of legs in what once was something to suggest to friends & coworkers to subscribe to.

    XM subscriber since Feb 2002,stockholder since 2007.

  • Report this Comment On August 25, 2009, at 4:38 PM, ralston3057 wrote:

    Rick,

    I hate to bash you but feel you deserve it. Do you honestly think that you provide your readers any service? No. If you did, you would have been reccommending SIRI as an investment since February. No, you wait until it becomes a 15 bagger to start putting the positive spin on it. Wow. I guess it goes to show how you analyze a stock and how your readers are way behind if they listen to your advice. Now, I could understand if you had not been aware of SIRI and you just discovered it. However, you have been writing articles Bashing SIRI since February. I'll bet your readers are wondering why you did not make them any money. In any case, I just wanted top point out the obvious.

  • Report this Comment On August 25, 2009, at 4:56 PM, TxTom wrote:

    SIRI is on a tear lately. I'm not sure fundamentals mean very much when coming out of a recession of this magnitude. And I do agree, MF didn't provide much positive guidance regarding this stock.

    I recall buying it at $.14 and watching it go up while articles here kept stating how terrible an investment Sirius was. But all anyone had to do was watch the positive developments and rising stock price to know otherwise.

    Probably a $1 stock or better by year end. At least $2 or better in 2010. Perception is everything in today's market. Happy investing...

  • Report this Comment On August 25, 2009, at 5:10 PM, plange01 wrote:

    in a year sirius will fail. it live off investor cash infushions and nothing else.

  • Report this Comment On August 25, 2009, at 5:15 PM, trammen0 wrote:

    Rick you could of mad money if you listened to the people making comments on your foolish articles!!!

  • Report this Comment On August 26, 2009, at 12:39 AM, redneckdemon wrote:

    Unless of ocurse the entire point of his articles was to point out both the pros AND the cons of the stock in question (which is exactly what he has been doing all year), in which case he has accomplished what he has set out to do and will likely continue apace.

    Honestly, people get so worked up about this company. I have yet to see Rick give SIRI a "don't but this stock, EVAH!!" sticker, yet every time he writes an article about it, people fly off the handle. I swear, he could title the article "SIRI is the Devil!" and fill the article itself with cake recipes and the same folks would be filling the comment section with the same "Y U bash XM?" nonsense.

    Really makes me wonder about all the market research some of the commenters do, if they can't ever read a simple analytical article without letting their emotions get the better of them.

  • Report this Comment On August 26, 2009, at 12:41 AM, ThongLover wrote:

    Hey Matt, Mike, Recondo...wow...go get a date or something...quit being haters. If you're going to blow BS like you do, at least back it up by giving an opinion. At least Recondo had something to say...very little (I hate my stations...BOO HOO!!...go listen to FM buddy...oh, you do?!? Well...that's kinda dumb...oh your ipod...wow that's unique and everchanging...oh, you've got 3000 songs on it?!? Oh...well, there ya go big spender.)...but Matt and Mike just say the website sucks and it's because there's another Siruis article.

    Wow...why don't you go read articles about finger painting if that's what you're into...i'm sure there are plenty of other articles to read about other stocks and investments. As you can see, there are plenty of people interested in Sirius. Would RAF or anyone else like to agree with me that even though Sirius is under a buck, it's easily a TOP 50 stock in the USA as far as buzz, interest, etc...?

    Anyway, yeah, 15 bagger...now you tell us...agreed...but we're just getting warmed up...stick around.

  • Report this Comment On August 26, 2009, at 12:48 AM, mikecart1 wrote:

    ThongLover, "Top 50 stock in the USA as far as buzz"?

    I didn't know that is how we analyze stocks these days. I guess I missed the memo. So if we talk about a stock over and over, sometimes 3-4 times a day for several months straight, that makes the stock somehow a Top 50 stock.

    Gotcha!

  • Report this Comment On August 27, 2009, at 12:05 PM, ThongLover wrote:

    Wow Mike...so you're saying that Motley Fool...not my favorite site by the way...publishes 3 or 4 articles a day for months at a time?!? That's just plain exaggeration...they publish 3 or 4 articles a week maybe...sometimes one or two more than that.

    My point wasn't to analyze stock based on buzz. My point was irregardless of how well the stock is doing or the SP, Sirius gets lots of attention because it's A) widely held and B) got way more upside potential than the typical stock (is google going from $400 to $4000 anytime soon?) and C) people are very interested in the news about it because of A and B. THAT is why there are lots of articles on the stock...it's all about demand.

    It's unfortunate because some sites manipulate using this...adding Siruis to an article just to get more hits when it's really about something entirely different.

    That was my point Mike...that's all...there's your memo. :-)

  • Report this Comment On August 27, 2009, at 4:14 PM, beerman53 wrote:

    If you subscribe then you know why its a great stock.

    If you don't ... try it for 60 days and then turn it off and go back to 2 min of music and onslaught of commercials and can laughter.... you will be back

  • Report this Comment On August 27, 2009, at 5:02 PM, createyourfate wrote:

    ...long live sirius!

    and SNRY (Solar Initiatives)...this penny made me $$'s and now I am back in.

  • Report this Comment On August 27, 2009, at 5:37 PM, multi007 wrote:

    wow - siriusaldo - lay off the coffee.

  • Report this Comment On August 27, 2009, at 8:47 PM, stockmenot wrote:

    Red neck, That is not true. Motley fool made a comment that caused me to sell my SIRI stock when it hit .75, because of the comment that they somehow got to ride along with the good stocks and "I can't figure out why" (in a nutshell). It was quite derogatory, and there were a couple other stocks listed with it.

    I'm noticing a pattern of "damage control" when Motley is wrong by calling out the stock and somehow implying that they had been neutral on it, but now that it's taken off, can see some life left in it. That's a smart strategy....instead of giving your readers a chance to respond. But I would respect you more if you were just honest about it. I used to listen to everything and trusted your honesty, but not now.

  • Report this Comment On August 28, 2009, at 2:17 PM, plange01 wrote:

    sirius and aig are the 2 best stocks to short...

  • Report this Comment On August 29, 2009, at 5:54 AM, DianeinAtlanta wrote:

    I loved XM - the playlists were better and I signed on in 2002. When Sirius took over, my rates went up and the quality went down.

    I unsubscribed a few months ago after a totally unannounced rate hike. It took over forty five minutes to get through to a customer support person. I had gotten an email from Sirius stating my rates would be good for at least another year just a few weeks prior.

    In these challenging times, I can listen to a few commercials to avoid being ripped off.

  • Report this Comment On August 31, 2009, at 6:32 PM, PSU69 wrote:

    SIRI lost barely 1 % of their subscribers during the chaos of the last few months. I use and enjoy the product. New units are adding to the subscriber base as auto sales finally get back in gear. I predict the stock will be $2 before Santa does his magic. I predict it willl be over $3 by mid-2010.

  • Report this Comment On September 01, 2009, at 3:37 PM, Purpleheartfool wrote:

    I owned SIRI for a while at about $1.40 or so, and sold at $0.99. But I kept watching it and bought back in at $0.39. Not a big part of my portfolio, but my lifeline when on my sailboat in Panama. We "watch" Fox and Friends every morning and sometimes listen to "Radio Classics" in the evening.

    I also have found out that if you have a Stilleto 2, you can tuck it up under the shade in your Boeing (and probably other aircraft) and pick up the satellite and listen to your favorite channel while crossing the country. I try to sit on the north side of the airplane, but have found it to work even on the south side.

    I bought my first Sirius in 2002, and bought a "lifetime" subscription immediately. Paid $399 (understand that now it's $499), but figured a breakeven in 3 1/'2 years at $12.95/month. So effectively, I've been listening free for the past 3 years with (hopefully) many years to come. I have it set up in my condo in Southern AZ and on the boat and just transfer the Stilleto back and forth.

    I own it because I love it, but if it hits about $10 a share someday I won't love it any less!

  • Report this Comment On September 01, 2009, at 5:20 PM, Dannysea wrote:

    I also have been listening to XM for years. Very disappointed in the quagmire dilution with Serious. I purposely chose XM for their music and some news. Still am so very happy compared to FM talky-talky. During their anxious time around May took a chance and picked up lifetime for $399. They even prorated me from my previous plan, so I bought a second lifetime we use at the shop.

    Speaking of losses,this company needs to forget some of these talk shows that are being paid hundred million+ $$. There is just no way it raises that kind of added revenue. At the very least negotiate reasonable costs as they are the only big circus out there. And if they do not want to negotiate? Finish the contract, and don't even mention they will be dropped.

  • Report this Comment On September 04, 2009, at 12:33 AM, EricCB wrote:

    XM/Sirius is having obviously cash flow problems. I, like a number of other people who I read about on other sites, are having problems getting any kind of refunds from XM. They owe me a refund for a car I sold that still hand a year of service remaining. Over 3.5 months I have gotten the run around. They are "investigating" is what they keep telling me... over and over.

    So, as I see their stock languish at the bottom of the barrel, at a whopping .62 cents, well, I see that as overvalued (and karma, quite frankly). They certainly are not treating myself, and others, well enough to stay customers (my new car has an XM Radio, but I did not activate beyond the free 90 days). I see XM/SIRI going down more. They are overvalued.

  • Report this Comment On September 06, 2009, at 9:02 PM, AlexisMachine wrote:

    There is something about investing in Sirius/xm stock that sends many of the investors into a frenzied animalistic rage when confronted with the slightest mention that Serious/xm stock is not exactly Berkshire Hathaway quality let alone anything but a historically terrible investment for the vast majority of those who have seen thier wealth vanish after buying this stock. Look at the facts and track the price of these shares from the year 2000 to see one of the worst downward death spirals in the annals of stock loss history take place right before your eyes. Figures can't lie but liars can figure which is the only way you could try to paint this stock as having a super positive outlook and being a sound stock for the protection of capital as well. These are just facts that I am stating here and the response from shareholders of serious is like that of no other companies shareholders I have ever known of. They come crashing out of the woods raging like like giant silverback apes, oohhh aahhh eehhhhh ahhh ee eehhe, as they pound thier chests and begin hurling thier feces at the focus of thier psychotic rage. This is not the work of just one or two angry old alpha baboons and apes who are always hostile in this manner. This is an entire herd of primate's who seem to hear any negative mention of Serious/XM throughout the investment jungle as a call from Tarzan. Suddenly a herd of babbling monkey's of every shape and size seems to charge in from all directions and without exception they are armed with fistfuls of thier own offal or busily grabbing for a steaming ball of poop to hurl at the person so evil, so awful and diabolical that the vile creature dared to point out that Serious/xm has been a lousy stock, has done a lousy job of operating as companies generally do in comparison and that it is a time, who just never needed this idea at all and superior companies offering a better product will soon be driving a stake into this bloodsucking capital vampire's heart in many people's opinion including my own. I am not rooting for this to take place, nor do I want to see this company go out of business. I would take no pleasure in witnessing the losses of one of Sirius/Xm's investors and if it was up to me you'd all make 1000% ROI's. If wishes were horses beggars would ride so the reality is that I have no ability to affect the financial future of this company no matter what I do or how hard I might try it would all be for naught. So my suggestion to all of the apes named Ape out thier who own shares in this company is that you spend less time focusing on throwing your feces at those who cannot effect your investment and more time focusing on the feces you have invested in by buying this stock. Rather than hurling shares of serious/xm at me picking up where you left off you might try to sell them to someone else before the fundamentals kick in and see to it that Sirius/XM is a terd that finally gets flushed.

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