Shares of Sirius XM Radio (SIRI +0.00%) are rolling again. The satellite-radio provider's stock has moved higher for seven consecutive trading days. The shares have soared 11.8% in that time, or 7.7% over the past week alone. Sirius XM stock is above $5 again. You have to go back to April to find the last time shares closed north of $5 and all the way back to March to find the time the stock was this high.
There weren't a lot of new developments propelling the stock higher during last week's ascent. CEO Jim Meyer was presenting at the annual J.P.M organ Global Technology, Media, and Telecom Conference on Tuesday morning, but Sirius XM isn't the the type of stock to move based on analyst presentations. The real catalyst here -- the one that triggered the seven-trading day winning streak -- happened a week earlier, when a New York Post piece reported that Sirius XM had restarted negotiations for Pandora (P +0.00%).
Image source: Sirius XM Radio.
Beg, deal, or borrow
Sirius XM has been openly flirting with Pandora for nearly a year, reportedly with an uninvited offer to acquire the streaming music service for $15 a share last summer. Pandora rebuffed that move. Most of the recent comments from Sirius XM -- either directly from execs at the premium-radio giant or through majority stakeholder Liberty Media (LSXMA +0.00%) -- have centered mostly on concerns that they think Pandora's stock is only compelling at the right price.
The market clearly likes the idea of Sirius XM with Pandora in its arsenal. Sirius XM stock has moved higher every single day since the New York Post report broke on May 17. The real surprise is that investors haven't been as enthusiastic about Pandora's stock. Shares of Pandora initially popped higher on the news, but the stock has moved only 3.2% higher over the same seven trading days of Sirius XM's nearly 12% pop.
Buying Pandora would make sense. Sirius XM and Liberty Media know their satellite-radio platform is popular with drivers -- accounting for the lion's shares of its 31.6 million subscribers -- but its secondary streaming offerings haven't gained the same kind of traction. Pandora, meanwhile, is struggling these days with languishing growth, but it has a huge established base of users who rely on its music-discovery algorithms to crank out curated playlists. Most of Pandora's 76.7 million users lean on Pandora as a free ad-supported business, but if Sirius XM is able to excel in pushing premium subscriptions the way it has with satellite radio, it could be a big boost for Pandora's finances. There are also some obvious cross-selling opportunities for both consumers that can take advantage of both platforms and advertisers that want to reach wider audiences.
The pairing would be a good combination either way, making Pandora a speculative buy and validating Sirius XM's success as an investment.
