Sirius XM (SIRI -2.62%) has been a big loser. As of Feb. 23, its shares have tanked 65% in the past five years. This trend alone might keep investors away.
However, 37% of this company's outstanding shares are owned by Berkshire Hathaway, a stake that was built during Warren Buffett's time as CEO. This might compel investors to take a closer look.
Here's what you need to know before buying this music stock in 2026.
Image source: Getty Images.
Swimming against the tide
It's generally a smart idea for investors to at least consider putting money behind businesses that are benefiting from secular trends. Unfortunately, Sirius XM is not one of these companies.
It's the only satellite operator in the U.S. With the prevalence of faster internet speeds and more capable smartphones, though, consumers don't need to rely on Sirius XM to listen to music, podcasts, news, or sports. Streaming platforms from the likes of Apple, Spotify, and Alphabet's YouTube all give Sirius XM a run for its money.
The business reported revenue of $8.6 billion in 2025, down from a peak of $9 billion in 2022. And the Sirius XM service ended the year with 31.3 million self-pay subscribers, down from its record three years ago.
Sirius XM's free cash flow is marching higher
While growth remains an obvious problem, Sirius XM is in decent financial shape. Yes, it carries $9.7 billion of debt on the balance sheet. That's equivalent to almost 140% of the company's entire market cap.
However, Sirius XM's free cash flow (FCF) soared 24% year over year to $1.26 billion in 2025. The business is nearing the end of its satellite-related capital investment cycle. Management expects FCF to be $1.5 billion in 2027.
This gives the company the firepower to return money to investors. In 2025, Sirius XM paid $365 million in dividends, with a hefty current dividend yield of 5.19%. And it repurchased $136 million worth of outstanding shares in the past 12 months.
NASDAQ: SIRI
Key Data Points
No signs of life for the valuation
The investment community doesn't seem pleased by Sirius XM's FCF rising so much. The stock price is down 11% in the past year. This can be discouraging to the bulls because it might indicate the market won't reward the shares with a higher multiple.
And that could deal a blow to the investment thesis. That's because Sirius XM trades at a cheap forward price-to-earnings ratio of 7.4. A higher multiple isn't guaranteed. Unless notable revenue and subscriber growth return on a consistent basis, investors seeking significant capital gains should act prudently.
