Image source: Sirius XM.

Bearish activity continues to tick higher at Sirius XM Radio (SIRI 0.98%). The satellite-radio monopoly that hit a new high in mid-July with 228.6 million shares sold short rose to 229 million as of the end of last month. 

Sirius XM is the most shorted Nasdaq-listed stock in terms of share volume. The low stock price explains some of that, but all three of the most shorted stocks trade in the low single digits. Short interest has been moving consistently higher since bottoming out at 139.8 million shares in mid-February.

The low stock price -- even after hitting a 10-year high late last month -- will always be magnetic to speculators. Sirius XM accepts it, preferring that to the dicey fate of most companies that have gone the route of declaring reverse stock splits. However, the sky-high number of bearish wagers placed on Sirius XM is still surprising, given the perpetually improving fundamentals at the media giant. 

Pump up the volume

There's no denying that Sirius XM's popularity grows with every passing financial update. It has posted sequential subscriber growth in 25 of the past 26 quarters. It's been consistently profitable. 

Several years ago, shorting Sirius XM was a reasonable bet on its going under. That's not going to happen anytime soon.

Revenue climbed 10% to hit a record $1.2 billion in its latest quarter, the result of a potent combination of an increasing subscriber count and an uptick in average revenue per subscriber. Unlike most cable and satellite TV providers, Sirius XM has been able to get away with pushing its rates higher over the years.

Sirius XM now has 30.6 million subscribers. It expects to close out the year with 1.6 million more accounts than it had when the year began. It generated a record $395 million in free cash flow in the second quarter, and it has gone on to revise its outlook, forecasting roughly $1.5 billion in free cash flow for all of 2016. Again, you don't short Sirius XM today under the conviction that it's going to declare bankruptcy as it was once was on the precipice of doing in early 2009, when its stock bottomed out at a mere nickel.

Folks these days short Sirius XM if they think it's overvalued or possibly as an arbitrage play on Liberty SiriusXM (LSXMA 0.74%). Liberty SiriusXM is the tracking stock that was a springtime spinoff by the media conglomerate that owns a majority stake in Sirius XM. Short interest in Sirius XM has been on the upswing since the arrival of Liberty SiriusXM, but it's worth pointing out that the stock was still the most shorted Nasdaq-listed company before the tracking stock that creates a potentially cheaper way to play Sirius XM hit the market in April. 

That leaves valuation as a magnet for shorts, but this is a company that continues to do right on that front. It's been buying back stock at a heady rate, even as its financial snapshot gets prettier with every passing quarter.

Sirius XM's steady ascent over the years has been a bear-burner. That leaves speculator masochism as a possibility, and it's hard to argue otherwise, given the media darling's performance over the years.