Sirius XM Scores a Perfect 10

Remember tomorrow's showdown between Sirius XM Radio (Nasdaq: SIRI  ) and NASDAQ OMX Group (Nasdaq: NDAQ  ) ?

It's not going to happen.

The satellite radio giant closed with a bid of $1 or higher for its tenth consecutive trading day yesterday, placing Sirius XM back in compliance with all of the exchange's listing requirements.

It's just as well, since there was no way that NASDAQ was going to boot one of its most popular stocks.

This would probably be a good time for the exchange to revisit its listing requirements, incorporating market cap into the mix. Sirius XM has a whopping 6.5 billion shares outstanding once we factor in Liberty Capital's (Nasdaq: LCAPA  ) 40% preferred stake. There is no way that the company can be considered too small to trade on NASDAQ if it had a market cap of $6 billion. 

Naturally, Sirius XM is an exception to most stocks that have spent most of the past year languishing below the $1 mark. There are no stateside stocks with market caps greater than $1 billion trading below $1 these days. There are only two companies -- YRC Worldwide (Nasdaq: YRCW  ) at $776 million and Flagstar Bancorp (NYSE: FBC  ) at $750 million -- with market caps greater than $500 million trading to the right of the decimal.

However, neither company commands the kind of brisk trading volume as Sirius XM. If any company could have forced the exchange into revising its requirements it would have been the satrad star.

Will we live through this again? Right now, it doesn't seem likely. Sirius XM would have to fall below the $1 mark and stay there for several months. The stock's historically volatile, so let's not write off the possibility of a slip beneath the buck. However, it would take souring fundamentals to keep the shares submerged for long stretches of time, and that's just not happening these days. Sirius XM has rattled off three consecutive quarters of net subscriber additions. It is now trending profitable, with positive cash flow to boot.

Unless the stock or auto market craters, Sirius XM will have little reason to meet with NASDAQ to discuss its flawed compliance policy.

Will Sirius XM stay above the $1 for keeps now? Share your thoughts in the comment box below.

Nasdaq OMX Group is a Motley Fool Inside Value choice. Motley Fool Options has recommended a write covered calls position on Nasdaq OMX Group. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. 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.


Read/Post Comments (16) | Recommend This Article (34)

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 April 28, 2010, at 10:11 AM, Stockmacau2010 wrote:

    i believe in a CEO that owns 32 million shares of its company.

    long in Sirius XM

  • Report this Comment On April 28, 2010, at 10:18 AM, Narcoticsrus wrote:

    Hurray for Sirius XM!! WOOF! That little dog has a lot to bark about! 10 consecutive days and it won itself the reward of staying listed on the Nasdaq. There is nothing BUT positive in the news for Sirius. You have all of the following:

    1. It is to remain listed on the Nasdaq after it successfully completed 10 consecutive days of holding a share price above $1.

    2. It's board of directors announced there would not be a reverse stock split necessary now.

    3. It's subscriber base gained 171,000 new subscribers, and more will continue as the auto market improves. Sirius has almost every automaker engaged.

    4. It's CEO wouldn't own 32 million shares of his company if he didn't believe in it. Thanks for that comment above Stockmacau2010! It makes a whole lot of sense.

    5. Satellite radio is the wave of the future. It is not going away anytime soon.

    6. Mel Karmazin is a great CEO and knows how to run a company. Any other company would have been bankrupt by now. Go Mel!!

    LONG SIRIUS!! BUY AS MANY SHARES AS YOU CAN!! Don't be left in the dust like the naysayers will be when they go bust!

  • Report this Comment On April 28, 2010, at 10:19 AM, Narcoticsrus wrote:

    Hurray for Sirius XM!! WOOF! That little dog has a lot to bark about! 10 consecutive days and it won itself the reward of staying listed on the Nasdaq. There is nothing BUT positive in the news for Sirius. You have all of the following:

    1. It is to remain listed on the Nasdaq after it successfully completed 10 consecutive days of holding a share price above $1.

    2. It's board of directors announced there would not be a reverse stock split necessary now.

    3. It's subscriber base gained 171,000 new subscribers, and more will continue as the auto market improves. Sirius has almost every automaker engaged.

    4. It's CEO wouldn't own 32 million shares of his company if he didn't believe in it. Thanks for that comment above Stockmacau2010! It makes a whole lot of sense.

    5. Satellite radio is the wave of the future. It is not going away anytime soon.

    6. Mel Karmazin is a great CEO and knows how to run a company. Any other company would have been bankrupt by now. Go Mel!!

    LONG SIRIUS!! BUY AS MANY SHARES AS YOU CAN!! Don't be left in the dust like the naysayers will be when they go bust!

  • Report this Comment On April 28, 2010, at 10:33 AM, geoslv wrote:

    This should free it to move gradually upward. But then we always say that and SIRI kept getting suppressed. As soon as Goldman Sachs beats these pesky charges I expect they will be back shorting or whatever they were up to. That's obviously why volume dropped, but you guys never want to say it. It's the season for disinformation.

    I'm wondering why you like to count Liberty's preferred shares as part of the common count. Do you all feel so certain that Liberty will cash them in for common. I don't know. What's so obvious about their plans. No one can explain it.

  • Report this Comment On April 28, 2010, at 10:34 AM, puravidainCR wrote:

    Sirius XM is definately doing well in 2010 and I plan on buying more stock on a regular basis. Of course, pay close attention to the auto industry and their sales numbers since if the economy falters again, I believe Sirius XM could be in for a rough time again. Also, I hope that Mel K is looking to expand into other markets such as Central and South America, with Brazil being a very lucrative target. Paying that debt down while times are good will help bring in even more shareholders and boost the stock price. It has been a great ride and I expect it to continue just be vigilant!

    Definately LONG SIRIUS XM for at least the rest of this year and maybe next with a continued economic recovery.

  • Report this Comment On April 28, 2010, at 10:36 AM, moneybagz718 wrote:

    Anyone else belive this stock will ever go over the 2.00 dollar mark?

  • Report this Comment On April 28, 2010, at 10:40 AM, moneybagz718 wrote:

    Anyone belive Sirius will hit the $2 mark soon?

  • Report this Comment On April 28, 2010, at 11:37 AM, BigVincent wrote:

    I think the stock price will go up just as fast as it went down in 2008-2009. I predict significant gains in the $2.25 range by FEB of next year if the company continues momentum.

  • Report this Comment On April 29, 2010, at 2:47 AM, urfools wrote:

    Sirius Scores a perfect 10???? U guys are hilarious. I take it you must have fired the guy at Motley Fool who did a 4 minute video rant last year saying that Sirius was "Junk" and that everyone should sell it and if you did not you were a very dumb investor. Only the dumb money is buying Sirius you claimed, when it was at 15 cents a share. Hmmmm, who is the fool I wonder?

  • Report this Comment On April 29, 2010, at 9:26 AM, cantbefoolish wrote:

    BIDU's 1st quarter rev. was about $190mil. and their share price jumps to over $700. SIRI's 1st quarter rev. will be close to $700mil. and their only at $1.18 per share. Makes you wonder what price SIRI should really be at. Yes, I understand SIRI has many more shares outstanding, but they kill BIDU in revenue.

  • Report this Comment On April 29, 2010, at 10:55 AM, cableguy815 wrote:

    cantbefoolish... you are true fool. Bidu has 190mil in rev and about 34.8M in shares. Siri has 700mil in rev and over 3.8B in shares. That is 100X more shares than Bidu. So by your reasoning siri is way way overpriced or Bidu is way way underpriced...

  • Report this Comment On April 29, 2010, at 2:04 PM, cantbefoolish wrote:

    Yes cableguy, I am a fool loaded in cash. While smart guys like you, are up to your necks in debt. What's BIDU's current p/e? A little high in comparison with most stocks, don't you think?

  • Report this Comment On April 29, 2010, at 6:01 PM, cantbefoolish wrote:

    You said I'm a "true fool". Did you not make the first assumption? The relevance of BIDU's P/E, is that investors are willing to pay over $700 a share for a stock that has well over a 100 multiple, but they won't touch SIRI for a buck. All SIRI has to do, is get to $.05 e.p.s, which isn't out of reason, and their multiple will be much cheaper than BIDU's. Although, you can make that comparison with plenty of other stocks like GOOG, T, ...etc.

  • Report this Comment On April 29, 2010, at 9:26 PM, Narcoticsrus wrote:

    THIS IS FOR ALL THE NAYSAYERS AND DOUBTERS OF SIRIUS: FOUND TODAY 4/29/10 on SEEKING ALPHA,

    There are also two key events that will take place in 2010, that will give added strength to this already bullish scenario. The first will come on the last trading day of May when the preliminary steps are taken to rebalance the Russell indexes. As long as Sirius XM Radio shares are trading above one dollar as they currently are, Sirius XM will be added to the index on the last trading day of June. The Russell Re-balancing will cause added demand for Sirius XM shares not only on the final day of June, but leading up to that day as traders buy in advance of the forced institutional buy-ins that will occur.

    A second key event will occur in December, when the NASDAQ 100 (QQQQ) is rebalanced. If the re-balance were to occur today, Sirius XM would be added to the quad Q’s based on its current market cap. Currently, there are six companies listed on the NASDAQ 100 with lower market caps than Sirius XM Radio. There are still others with market caps just above Sirius XM’s current market cap of $4.583 billion (based on 1.18 share price).

    Symbol/ Market Cap (billions)

    LOGI: 2.99

    PDCO: 3.90

    FWLT: 3.92

    CTAS: 4.21

    ILMN: 4.48

    DISH: 4.581

    With year end targets ranging from $1.25 -$1.50, Sirius XM is a shoo-in for this year's NASDAQ 100 re-balance. Again, traders will spawn demand well ahead of the rebalancing itself. These two events will increase demand for SIRI shares. The basic laws of supply and demand suggest that Sirius XM shares will increase significantly as the year progresses. It is for these reasons, that I maintain my bullish position on the equity.

    If you all are SMART...you will LONG Sirius! ;)

  • Report this Comment On May 04, 2010, at 4:49 PM, Mutterwolf wrote:

    Motley Fools LOVE Siruius/Xm but I don't really understand it.

    I had Sirius as a DirectTV customer and it was awful. The most bland tasteless predictable programming by robot and popularity polls. It is everything that is wrong with consolidated media in my opinion.

    Peter Lynch says "buy what you know and like". Buffet buys well managed companies with a product "moat". Sirius has a moat and maybe is well run, but the product is not one I'd buy or recommend.

    173,000 new subscribers, but what percent retained?

    DirecTV music isn't Sirius now, and that has to hurt the subscriber number.

  • Report this Comment On May 04, 2010, at 10:28 PM, geoslv wrote:

    Yeah Mutterwolf, what's up with DirecTV (Liberty) dropping SXM? What about all the talk of Liberty wanting to partner with SXM and conquering the world?

    That's a good general point about music programming.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1166819, ~/Articles/ArticleHandler.aspx, 10/21/2014 9:34:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement