Sirius Breaks the Buck

No one should be surprised by the delisting notice Sirius XM Radio (Nasdaq: SIRI  ) received this week.

Nasdaq's listing requirements state that a stock must trade for more than $1. If a stock breaks below the buck for 30 business days, it gets an alert from the exchange, along with 180 calendar days to get back on top.

Sirius XM has actually been trading below the $1 mark for nearly a year. Under Nasdaq's requirements, the stock would have been delisted earlier this year, absent a reverse stock split. However, the exchange flexed its leniency when equity prices began to crumble late last year. Now that the marketplace is stable, Nasdaq is again enforcing its $1 mandate.

Sirius XM has company. Since the exchange started the clock at the same time in August for all of its listed companies, several companies are receiving delisting notices this week. Insmed (Nasdaq: INSM  ) , Hydrogenics (Nasdaq: HYGS  ) , and Selectica (Nasdaq: SLTC  ) all have six months to get their share prices percolating.

As it stands, Sirius XM has two options if it doesn't want to be delisted:

  • Meet the minimum listing requirements by March 15, 2010.
  • Engage in a reverse stock split.

It already has shareholder approval to engage in a reverse split, but there's no need to rush there. Six months is an eternity, given Sirius XM's history of volatile trading.

Sirius XM has two more quarters to report, and any upbeat cash flow guidance or a turnaround in subscriptions could help push the stock higher. Then again, the news could also prove less than encouraging.

The $0.31 that separates Sirius XM from a stay of exchange execution, barring a reverse split, doesn't seem like much. But on this minuscule penny-stock scale, it still implies that shares have to appreciate by 45% over the next six months.

The closer we get to mid-March without a buoyant price, the greater the chances that Sirius XM flips the preapproved switch on the reverse stock split.

Reverse splits aren't fatal. AIG (NYSE: AIG  ) and Coeur d'Alene Mines (NYSE: CDE  ) are trading sharply higher since their reverse splits earlier this year. However, the splits are just like the "in case of emergency" axe behind a plate of glass. Sirius XM would prefer to put out the fire on its own before it starts breaking things.

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.


Read/Post Comments (26) | Recommend This Article (16)

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 September 18, 2009, at 2:26 PM, mikecart1 wrote:

    No one is surprised by another SIRI article by TMF allstar writer Rick.

  • Report this Comment On September 18, 2009, at 2:37 PM, topsecret09 wrote:

    So does LGDI.... 63 cents to $1.03 In four days... under the radar blogs have had this one "LIVE" for over a week.... http://www.lgdi.net/

  • Report this Comment On September 18, 2009, at 2:55 PM, js643dp wrote:

    Amazing.....You have overlook one very improtant FACT.

    The NASDAQ often times allows an extension beyond the intitial 180 days. So there is another option they have

    What is most amazing is your continuous carelessness with your coverage..... so you have to accept those who question your motives and/or intellect when it comes to SIRI

  • Report this Comment On September 18, 2009, at 2:58 PM, brandonmatthews wrote:

    Actually, after the initial 180 days, Sirius can then file an appeal that will give them another 180 days...earliest possible delisting would be september of 2010.

  • Report this Comment On September 18, 2009, at 3:24 PM, JRSmithman wrote:

    lol another MF wonderful article you know they want a piece of the media as well with their own negative bias writings. I still look forward to the 2 QTRS coming up and this is not the same stock as it was when it was trading at .30 when this woudl go up by .02 to drop immediatly for profit / this is actually keeping up with the market when the market is up this stock is % wise following the market. Media is King so let the panic begin. Starting with this Garbage

  • Report this Comment On September 18, 2009, at 3:52 PM, cajun021 wrote:

    We will be seeing this happening to a lot of companies. For me this is just another indication the recession is coming to an end and NASDAQ is saying its time to put up or shut up.

    The one thing Sirius has done is fight its way through a tough time. I cant image them giving up and delisting. However I’m not certain they can find a way to get over the $1 thresh hold either.

    The question that remains to be answered is, how many of the cash for cluncker new car buyers will continue their subscription? 10%?, if they're lucky! It doesn’t matter how good your programming is if you can only hear it from your car. This service is geared to people that live in their vehicles, IE truck drivers. Can Sirius expect the casual driver to use their disposable cash on such a frivolous item? Again, that remains to be seen.

  • Report this Comment On September 18, 2009, at 3:59 PM, JamesRobertDobbs wrote:

    RE cajun021 "This service is geared to people that live in their vehicles, IE truck drivers"

    Have you missed the news about the Sirius app on the iPhone?

    Are you aware that there are several other home-based products that can stream Sirius, like the Squeezebox radio and Grace Internet radio?

    Have you heard about home docks for Sirius receivers?

    Dude.

  • Report this Comment On September 18, 2009, at 4:07 PM, RAF22 wrote:

    Readers here: If you want more accurate and unbiased information regarding Sirius XM - go to Satwaves.com or Seeking Alpha.

  • Report this Comment On September 18, 2009, at 4:08 PM, tom2727 wrote:

    In response to the first comment-->

    Of course another SIRI article. It's all about the page views baby. Articles about SIRI, AAPL, GOOG, etc bring the eyeballs to the pages, therefore TMF writes about them ad nauseum. That's what keeps the lights on.

    Never mind that small time individual investors would be much better served by articles highlighting lesser known small cap stocks. They ain't running a charity y'know.

  • Report this Comment On September 18, 2009, at 4:20 PM, CollegeAdmin wrote:

    I too had to question the quote the SIRI is limited to your car. I know many people who stream it through digital speakers just for the sports channels. I don't think that is the issue!

    They are a good service with a growing customer base. Rick has shown us before that people dropping the service is growing but he fails to mention that the net customer base is growing and furthermore it is growing in a down economy!

    Many people say Pandora will put them out of business because it is free. There are many call-over internet options available and that doesn’t keep the phone companies from going out of business. Pandora is not the same thing nor is free radio or any of the other free options out there.

    As for the low share price, if you think about it, it is tied to debt! They tried to act like the government and print more shares to cover debt offerings. Too many shares are floating. It just diluted the stock price. I don't believe that this will keep the stock from getting above $1 on its own. It will by the end of the year! (Can someone mark my words on this one? :)

    As for the reverse split, it isn't the worst thing on earth. NO value will be lost and once cool minds prevail the value of the company will be realized and as Rick to his credit for once mentioned stocks can do well after a reverse split. But I don't think this will be necessary.

    Solid company that got screwed by the government during the merger! I am long an not sweating!

  • Report this Comment On September 18, 2009, at 4:29 PM, dedmunds wrote:

    Readers: go to Satwaves.com or Seeking alpha for more accurate and informational unbiased on SIRI !!

  • Report this Comment On September 18, 2009, at 4:40 PM, wuff3t wrote:

    "Of course another SIRI article. It's all about the page views baby. Articles about SIRI, AAPL, GOOG, etc bring the eyeballs to the pages, therefore TMF writes about them ad nauseum. That's what keeps the lights on..."

    Yes, but they're bound to really, aren't they? This is a website aimed at investors, so by definition if they get huge numbers of people reading these articles then they are obviously doing the right thing by writing them, aren't they? It just proves they are focusing on the stocks that really interest people. It would be suicidal to deliberately ignore companies that lots of people are interested in, and instead write articles about companies only the very few care about.

    What's surprising is the number of people who are apparently really angry about the number of SIRI articles that TMF writes, and believe this attention to be simply a ruse to get website hits - yet fall into TMF's trap by not only reading the articles but taking the time to comment. You'd think those people would avoid TMF altogether, wouldn't you? But apparently they can't help themselves.

  • Report this Comment On September 18, 2009, at 5:02 PM, codyford1981 wrote:

    wuff3t, man it sucks to be the hater that you are. If you hate the way that an investment site runs, then why don't you move to one of the 1500+ other sites that offer a similar service. While you hate having your vision stained with SIRI articles; those of us that currently own said stock are tired of having our vision stained with repeated whining complaints that Fool.com is catering to the majority to heavily. You should either 1) Go to another site, 2) Buy some SIRI, so that you have a reason to post or 3) Shutup and take what you can from what the good people at Motley Fool provide for us. Because as of right now, everyone gets done with your posts and then wish that they had skipped to the next one.

  • Report this Comment On September 18, 2009, at 5:23 PM, wuff3t wrote:

    codyford1981,

    Not a hater at all. Sorry if I angered you, but I think you misread my comment. I love TMF, because of their balanced viewpoints. And I have no objection to them writing articles about SIRI - it's not a stock that interests me, but I don't expect the world to revolve around me so that's not a problem. I read as many articles as I can, even about stocks I have no interest in owning, because I believe there's always a chance I'll learn something useful from them.

    My point was only that I'm surprised how many other people claim to hate TMF articles about SIRI (even down to unnecessarily abusing individual authors) yet comment on every article written.

    And, whilst not wishing to start one of the pointless, individual slanging matches that sometimes unfortunately occur on TMF, I should add that I don't think you have the right to speak on behalf of everyone.

  • Report this Comment On September 18, 2009, at 5:37 PM, Macpherson02 wrote:

    Maybe Sirius can make a profit one day.

    Or maybe it will go the way of the dodo since internet radio will be the next thing.

    Hilariously overrated company.

  • Report this Comment On September 18, 2009, at 6:33 PM, ST0CKTRADER wrote:

    it likely will go over a dollar by then and won't NEED to do the reverse split to prevent delisting, but i would suggest that they do it anyways....this stock will never go over 5.00 on it's own without the reverse split....it's just waaaaaaay too many shares outstanding and to do so would create a very large and unrealistic market cap, i would think a 20:1 reverse split at current price would be in the best interest of all shareholders long term, if shareholders would like to see siri as a 20 dollar stock one day, it's possible but only after a reverse stock split.

  • Report this Comment On September 18, 2009, at 9:57 PM, cajun021 wrote:

    RE:JamesRobertDobbs Have you missed the news about the Sirius app on the iPhone?

    Are you aware that there are several other home-based products that can stream Sirius, like the Squeezebox radio and Grace Internet radio?

    Have you heard about home docks for Sirius receivers?

    Dude.

    This is my exact point. Everything you mention is based on disposable cash. Not everybody can afford this.

    Let me ask a simple question. How many people do you know own an I-Phone? 2nd question of those, how many of them have that specific app? Of all the people you know, how many own Sirrius dock or even access Sirrius off the internet?

    The real world is this, people are only getting what they actually need right now and Sirrius is not a need, only a luxury.

  • Report this Comment On September 19, 2009, at 10:52 AM, goforitrandy wrote:

    Hey listen guy's, If anyone has a right to complain

    about SIRI it's me... I had 56,000 shares back in Feb when I was a newbie to the stock market... I lost $4,000 in about 15 minutes when I paniced and sold

    my stock at a 50% loss because of cnbc stupid comment that Siri was "POSSIBLIY PREPARING TO FILE BANCRUPTCY" I didn't no anything about the stock market back then BUT... I have no doubt that SIRI will hit $1 before the end of this year and I sold all my stocks and bought 35,000 shares of SIRI @ .60 cents just to prove to all those people who think SIRI is a crappy stock... I know a great opportunity when I see one and I think SIRI will be trading in the $1.50 range in a matter of weeks not months... It has to when stocks like FNM go form .50cents to $1.75 in a few days... or Rite Aid going from .40 cents to $2.35 or Vonage a stock that has done nothing all year and then all the sudden the stock goes from .50 cents to $2.50 in 48 hours...

    Yes there will be Jim Cramers out there that will bash this stock but in the end all of us true SIRI die hards will be laughing all the way to the bank when we make $20,000, $50,000, or a $100,000 or more in the next few weeks from SIRI... By the way Jim Cramer is gonna have to change his tune real quick as well because his Mad Money show will be exclucively aired via the Iphone on SIRI app... So watch how these fools will change there view of SIRI over the next few weeks...

    Besides there are so many positive thing going on with SIRI that will bring in more customers and more revenew... I could see millions of people wanting to get coverage of CNBC on their Iphone via SIRI app....

    And the Sirius Sky dock and other new mobile devices will explode sales for SIRI and give them some sirius cash flow... And keep in mind that their new satilite gives them the capability to broadcast Sirius Radio to millions of new listeners from all over the world... Sirius is positioned to take off like a rocket... And the media or short sellers can't keep beating down this stock forever when millions of people like me refuse to sell my shares for anything less than a $1 per share... I'm not panicing anymore long live SIRIUS...

  • Report this Comment On September 19, 2009, at 11:29 AM, goforitrandy wrote:

    One last comment, look what happened to SIRI on Fri when all the media ran their SIRI dooms day delisting breaking news... The stock went down one penny... lol... six months ago SIRI stock would have plunged down by 25% or more on that kind of news but today it's just an excuse to buy more SIRI stock on the dip... No one not even GOD himself (if there is one) could keep SIRI down for more than a blink of an eye... I predict SIRI will be over .80 cents or higher by Oct 1, 2009... and will be trading over $1 in the 4th Q of 2009 this year...

    Go SIRI or go home...

  • Report this Comment On September 19, 2009, at 2:08 PM, Bernie201 wrote:

    Hang in there lads and lassies.Sirus will rise from the ashes.Rick has the tanacity.I like the idea of the split,this could raise voltility,liquidty that would elevate status to a market player. Bernie201 Best to you all.........

  • Report this Comment On September 19, 2009, at 9:40 PM, Fredlee009 wrote:

    Next leg up takes us over $1. Lets enjoy the ride. Rick A. has been wrong about this company for so long now, he should be embarrassed to every mention its name. NO CREDIBILITY. He wont debate me in an open setting. Because his lack of facts and knowledge will be reveal. Always waiting for you Rick at the waves. Come say high.

  • Report this Comment On September 21, 2009, at 6:21 AM, deadlysaber wrote:

    I think the merger of Sirius Satellite Radio and XM Radio was a Pyrrhic victory for shareholders. Even with the diminished head winds, Sirius XM's crushing debt burden and slowing subscriber growth are such that we think shareholders are at risk of total loss.

    ----------------------------------

    Money without intelligence is like a car without a road.

    http://www.intelligentinvestingtips.com

  • Report this Comment On September 23, 2009, at 9:23 AM, artstudio1 wrote:

    Do yourselves a favor and don't read these biased articles from The Motley Fool. They never speak the whole truth and they are doing their best to keep Sirius XM down or out of business. Like most of today's biased media outlets (CNN, NBC, ABC, Etc.) they are spoon feeding us only the information they want us to have and not the whole truth. Be advised that Sirius XM can get an extension so they are not delisted in the next 180 days. Of course this wasn't mentioned above. If you don't believe me, then pay attention when Sirius XM goes global with their satellite broadcasts worldwide and they penetrate China's and India's auto industry. This stock will double in price after Christmas.

  • Report this Comment On September 24, 2009, at 12:15 PM, wordcarr wrote:

    If one could will a stock to rise, Sirius would,for all that write comments about the articles of MF, reality is not a factor.Today this fact was published at Media Daily News:Nielsen's findings suggest that young adults ages 18-34 are listening to just as much radio as the population at large, clocking an average 21.5 hours per week. Even better, the young, tech-savvy consumers that dominate its cell phone-only sample -- 15% of the total sample -- actually listen to radio more than average, clocking 23 hours per week. Given this fact, and the fact that Sirius is losing subs, who's going to buy the service?, Please tell that there's enought people that will pay to listen to more than 21.5 hours of radio every week to keep sirius going.Fairy tales can come true it can happen to Sirius stock holders. Write the fairy tale

  • Report this Comment On September 24, 2009, at 4:04 PM, TMFBent wrote:

    Wow, it's amazing how the rhetoric by SIRI fans hasn't changed over the years. The lousier this company gets, and the lower the stock price, the more people get attached.

    How is the possibility of begging for an extension from delisting possibly construed as good news?

    And still, far-fetched promises of getting a market in India or China... If people in the US aren't willing to pay to listen to this stuff (and enough aren't to keep this company healthy) then how on earth would anyone expect poorer nations (with hundreds of different languages, by the way, unlike the U.S.'s one)

    I really do hope SIRI can get above a buck, because I'd like another chance to short it in CAPs.

  • Report this Comment On September 24, 2009, at 5:35 PM, dbbfool63 wrote:

    It's really sad because it doesn't even matter what stock individual investors like and believe in regardless of how many good or bad fundamentals are considered.

    Reason: ..........................................

    Ever since the internet expanded to the point where individuals could find online brokers to make their own investment decisions, which has probably really grown after this last year due to the scandals, scum, and out right thieves screwed so many people out of there money...........

    The big boys figured the only way to make stocks move the way they wanted since Mutual funds didn't carry the full load anymore, was to try and Brain Wash the investors buy use of the media, paid Boiler room scams, and of course the MM's. Oh, I almost forgot the worst, CNBC.

    @Artstudio1, I think many of us have felt your pain before.

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