Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ:SIRI) moved lower this past week, sliding 7.4% to close at $3.75. The media darling's slide was far worse than the Nasdaq's 0.7% gain on the week.
There was more going on beyond the share-price gyrations, though. Sirius XM also reported mixed quarterly results, revealed that it will increase its monthly rate to $14.99, and expanded and extended its deal with Honda (NYSE:HMC). Meanwhile, one analyst initiated coverage with a bullish rating, but another downgraded the stock. On the streaming front, Apple (NASDAQ:AAPL) shed some more light on the initial success of iTunes Radio. Spoiler alert: Pandora (NYSE:P) doesn't have to worry just yet.
Let's take a closer look.
Sirius XM reported quarterly results on Thursday morning, and the market didn't like it. Revenue came in slightly lighter than expected, and its guidance for 2014 calls for revenue to climb by only 6%.
Yes, Sirius XM has been historically conservative in its guidance. That's something to keep in mind as subscriber, adjusted EBITDA, free cash flow, and revenue targets are bumped higher along the way more often than not.
However, the stock had hit another six-year high heading into the report. You can't afford to put out even mixed results with that kind of momentum.
Hearing 50 Cent will cost you 50 more cents
Sirius XM revealed during its conference call that it will boost its core monthly rate by $0.50 a month starting in January. That will be exactly two years since its previous increase. This isn't a big deal. Cable and satellite television providers do this perpetually. The rub is that programming and content costs per subscriber have declined over the past year, so that will make this increase harder to justify.
Sirius XM said it will inform its subscribers about the January increase in the coming days, but I'm guessing many will already know it. News travels fast these days.
Shifting both ways
Sirius XM is beefing up its deal with Honda. The new partnership adds more cars that will come with factory-installed receivers and will expire come 2020.
We also had a pair of analysts drive in different directions here. FBR Capital Markets picked up coverage of Sirius XM Radio with a bullish rating and an ambitious $5.50 price target. That was before the quarterly report. After the report we saw Goldman Sachs downgrade the stock, sticking to its price target of $4.25.
The Apple challenge
It's been a little more than a month since Apple introduced iTunes Radio, and it's gaining traction quickly. Apple revealed on Tuesday that it has attracted more than 20 million unique users to the new ad-supported streaming platform, checking out more than a billion tunes along the way.
This may seem intimidating, but Pandora's still way in the lead here. Apple is boasting about a billion songs, but Pandora serves up more than a billion hours of streams a month.
Still, it's an impressive feat for Apple, which flopped the last it tried to beef up its iTunes hub with the since-nixed Ping social layer. Sirius XM investors need to keep an eye on this move, since Apple product users tend to pay up for premium entertainment. It doesn't want to lose subscribers to iTunes Radio.
It probably won't.
It was an interesting week for Sirius XM. The new week isn't likely to be dull.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Pandora Media and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.