Well, that didn't take long.
Shares of Sirius XM Radio (Nasdaq: SIRI ) hit $2 for the first time in nearly three years this morning.
It's just a number. It's just a mile marker. However, just last week a few of us around here were wondering what it would take to propel shares of the satellite radio provider to the milestone they hit today.
I figured that it would hit the mark with the fourth-quarter rollout of Sirius XM 2.0
"The stock may blast through the $2 barrier before Sirius XM 2.0 hits the market," I wrote last week. "We have a couple of more quarterly reports to digest."
We didn't even need to hit the digestion process. Sirius XM nailed it ahead of next week's first-quarter report.
Strength in the automotive sector is clearly helping. Ford (NYSE: F ) and leading showroom operator AutoNation (NYSE: AN ) reported better-than-expected results this morning, fueling heartier hopes after months of strong sales.
It's a time to celebrate, but it's also worth reflecting on the dilution that could have been skirted if Sirius XM's creditors had been more forgiving in 2009. Sirius XM was forced to hand over 40% of the company to Liberty Capital (Nasdaq: LCAPA ) in a preferred-share stake two years ago, and that was on top of agreeing to pay stiff interest on a chunky loan.
Based on market cap, Sirius XM shares would be well over $3 now if it had 40% fewer fully diluted shares outstanding.
Obviously Liberty Capital isn't the enemy. It was the shrewd opportunist that turned a timely loan into more than $5 billion in equity. However, these milestones would be coming quicker if revenue and recent profitability weren't divided by 6.4 billion shares.
At the time, Sirius XM didn't have much of a choice. Bankruptcy was looming. EchoStar's (Nasdaq: SATS ) Charlie Ergen was the other vocal bidder looking to bail out Sirius XM, but it too wanted a thick piece of the action.
Sirius XM did what it had to do. It paid a dear price to a publicly traded media loan shark, but it gave it just enough time to turn the corner of profitability. It was a bumpy road to $2, but it got there pretty darn fast.
Will Sirius XM hit $2.50 or $1.50 next? Share your thoughts in the comment box below.