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Sirius XM and Pandora Hit New Highs

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Investors continue to warm up to Sirius XM Radio (NASDAQ: SIRI  ) , and that's bad news for those holding the 380.3 million shares sold short.

Shares of the satellite radio provider hit a new five-year high today. 

This shouldn't come as a surprise to those that have seen the media giant hit fresh high after fresh high since posting healthy first-quarter results two weeks ago. It's not just Sirius XM. Pandora (NYSE: P  ) also shot to a new high this morning.

It may be a surprise to see Sirius XM and Pandora with synchronized winning techniques today. Skeptics out there often argue that success at one company spells doom for the other. If premium satellite radio takes off, what's the point in ad-laden music discovery? If Pandora's a hit, why are people still paying for Sirius XM?

Naysayers have tried to profit from the perceived divergence by shorting the two stocks. Sirius XM had 380.3 million shares sold short when the month began, making the company the most shorted Nasdaq-listed company based on share volume. Pandora has attracted 35.7 million shorts. That may not seem like a big number when compared to Sirius XM, but we're talking about nearly 30% of the stock's float.

In the end, both companies have been able to grow despite seemingly going after the same audience. Active listeners at Pandora have soared 35% over the past year to 70.1 million. Sirius XM isn't growing as quickly, but it has been consistently profitable.

Naturally, the shorts aren't just worried about the past. They see a competitive future for digital music. Reports last week indicated that Apple (NASDAQ: AAPL  ) had cleared a licensing deal hurdle with Universal Music, paving the way for the consumer tech champ's own streaming platform. Nearly every tech giant has been similarly tied to rumors about rolling out a music service.

However, healthy double-digit percentage growth at Sirius XM and Pandora prove that there's certainly more than enough market to go around. Maybe that attitude will change when Apple and its peers dive into the market, but for now the shorts are the ones who are smarting after seeing the companies that they are betting against strike new highs.

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