It's been a hard past few months for Sirius XM Radio (NASDAQ:SIRI) investors. The stock is trading at levels last seen in June, and the shares have surrendered nearly a quarter of their value since peaking late last year.

It's not just bulls having a change of heart. Bears are getting hungrier. There were 224.2 million shares of Sirius XM sold short as of mid-March. It's the stock's highest short interest of 2014. This doesn't mean that 224.2 million is a high number for the satellite radio provider. We have to put this seemingly large number in its proper perspective. Short interest peaked 13 months ago with 414 million shares betting against Sirius XM. In fact, short interest was higher than 224.2 million in each of the 24 reporting periods of 2013. However, short interest bottomed out just below 185 million shares a month earlier. The bears are starting to come back, and it wouldn't be a surprise to see the naysayers growing in number by the time we get Sirius XM's metrics for the end of March in a couple of weeks.

One reason why bearish activity likely increased during the latter half of March is that the stock has fallen 8% since its mid-March reading. Speculators see Sirius XM shares heading lower and assume that the trend will continue. A bigger reason to wager on more shorts is that Liberty Media (NASDAQ:FWONA) is no longer trying to publicly acquire the company. 

Majority stakeholder Liberty Media had a buyout offer on the table from Jan. 3 to March 13 of this year. Most investors felt that it wasn't offering enough of a premium in a transaction that would saddle them with slower-growing properties in a new Liberty Media classing stock. Liberty Media chose to pull the deal instead of sweetening its offer. Liberty Media's decision will give Sirius XM more upside if investors get back on track, but it also eliminates the floor. Downside is no longer limited to Liberty Media's weak takeover offer. 

This doesn't mean that the bears are right. If anything, history has been on the side of the bulls since the stock bottomed out at $0.05 five years ago. Sirius XM sees healthy growth in subscribers, revenue, and free cash flow in 2014, and an encouraging first-quarter report in a few weeks could send the mounting bears scrambling for cover again.

We also can't assume that Liberty Media's done here. The capped floor and ceiling may be gone, but it's certainly possible for Liberty Media to revisit its takeover plans if the stock falls far enough where it would be greeted as a suitor at a reasonable premium.

Investors will naturally be hoping that Sirius XM can dig itself out of its own hole here. Despite the growing number of audio entertainment alternatives available in the connected car, Sirius XM continues to pad its count of self-pay subscribers with every passing quarter.

Things may not look pretty for Sirius XM at the moment, but they're not as bad as the share price downticks and uptick in shorts seem to suggest. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.