Every quarter matters for Sirius XM Radio (Nasdaq: SIRI).

Heading into Thursday morning's report, investors want to know if this satellite radio provider is the real deal.

After posting four consecutive breakeven quarters -- tacking on 1.1 million subscribers along the way -- one would think that Sirius XM has more than earned its keep. Sure, the stock hit yet another fresh two-year high yesterday, but skepticism remains if we go by the large chunk of bearish wagers in the form of shares sold short.

Let's go over some of the questions that will determine the stock's direction later this week.

1. Where's Howard Stern?
The question that won't go away should have been answered by now.

"We hope that prior to the third-quarter earnings call, we'll be able to have an announcement as to what is going on with Howard," CFO David Frear said three months ago, responding to the final question of the media giant's second- quarter call.

Well?

It remains to be seen what the right financial decision would be for Sirius XM, but losing Stern would create uncertainty. If Stern was to return to CBS (NYSE: CBS) or launch a premium streaming show through Apple's (Nasdaq: AAPL) App Store, it would also be likely to pull subscribers away.

Stern can't last forever, and his current deal that averages $100 million a year through December would result in a material bottom-line difference if the subscribers don't leave in droves.

Either way, January is coming soon. If Sirius XM doesn't have the answer to the Stern contract renewal question, it will have no choice but to have it addressed by its next conference call.

2. How is the model holding up?
We already know that Sirius XM remains magnetic. It revealed last month that it tacked on 334,727 net new subscribers during the quarter.

It's an impressive feat, at a time when many entertainment subscriptions are shrinking. Comcast (Nasdaq: CMCSA) lost 275,000 video subscribers during the same three months. It could be Black Thursday for cable providers, as Cablevision (NYSE: CVC) and Time Warner Cable (NYSE: TWC) will be reporting their latest quarterly results alongside Sirius XM.

However, there's more to Sirius XM's fiscal physical than the known roll.

  • Are subscriber acquisition costs improving?
  • Is churn heading lower?
  • Are programming costs in check?
  • Is the average revenue per subscriber growing?
  • Is the average ad revenue per subscriber growing?

Thursday knows.

3. Will Sirius XM's report be good enough for Wall Street?
The problem with a stock that has appreciated greatly between reports -- and Sirius XM's shares have soared 52% since its latest quarterly report -- is that expectations run high.

The gain may feel good at the moment, but history has a cruel lesson on that front. Let's go over how the market has reacted during its three most recent reports.

Date

Previous Close

Close

Earnings Day 
Change

Gain Between
Reports

Aug. 4

$1.01

$1.06

5%

(18%)

May 4

$1.23

$1.18

(4%)

12%

Feb. 25

$1.10

$1.07

(3%)

80%

Nov. 5, 2009

$0.61

$0.64

--

--

If the table is a bit unclear, let me spell it out. The stock popped 5% higher on the day that Sirius XM posted its second-quarter results, but the stock had shed 18% of its value since the previous report. The stock fell on the news of its two previous reports, after generating healthy share price gains between reports.

Following the trend, Thursday is likely to be a down day for Sirius XM -- in light of the 52% gain the shares have notched over the past three months.

The one thing that could change that fate, naturally, is if Sirius XM has a blowout quarter that exceeds even the lofty expectations behind a stock that has been a bottle rocket over the past three months.

In other words, don't be surprised if the stock takes a small step back on Thursday -- even if the numbers are great. The catalyst for a higher move on Thursday may very well hinge on any news regarding Stern's contract negotiations.

Thursday, don't be late.

What do you think Sirius XM will report on Thursday? Share your thoughts in the comments box below.

Apple is a Motley Fool Stock Advisor pick. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. 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.