Sirius XM Gears Up for Q4 Earnings Report: Challenges Loom Large
Sirius XM (SIRI) is set to announce its fourth-quarter 2024 earnings on January 30.
Stay updated on the latest earnings estimates and surprises with Zacks Earnings Calendar.
Current estimates put the fourth-quarter earnings at 63 cents per share, which remains unchanged from the past month. This signifies a notable 30% drop compared to last year.
Revenue projections stand at $2.17 billion, marking a 5% decline year-over-year.
In the past four quarters, SIRI has exceeded Zacks Consensus Estimates for earnings twice, matched once, and missed once, with an average negative surprise of 41.69%.
Sirius XM Holdings Inc. Price and EPS Surprise
Sirius XM Holdings Inc. price-eps-surprise | Sirius XM Holdings Inc. Quote
Let’s take a closer look at the factors impacting this upcoming announcement.
What to Expect from Sirius XM’s Q4 Results
Sirius XM’s fourth-quarter 2024 results are likely to reflect various challenges across its operations.
The company has been struggling with advertising revenues due to an influx of Connected TV options. This shift has persuaded advertisers to focus more on performance-based products, diminishing demand for digital audio advertising.
Moreover, SIRI’s podcast inventory has not met expectations, leading to further declines in ad revenue. These difficulties are anticipated to have persisted into the fourth quarter of 2024, adversely affecting the company’s revenue growth.
Changes in agreements with Original Equipment Manufacturers are also noteworthy. Converting car trials from paid to free subscriptions may enhance long-term profitability but is expected to contribute to a short-term decrease in paid subscriptions, impacting Sirius XM’s overall revenue.
Efforts to convert trial subscribers into self-paying customers have faced obstacles. While SIRI has initiated strategies like personalized customer interactions and flexible pricing, it’s too early to tell whether these measures will offset the anticipated loss of subscribers in the fourth quarter of 2024.
Adding to these challenges is the increasing competition from streaming platforms such as Apple (AAPL) and Spotify (SPOT), which is likely to have negatively affected SIRI’s revenues. Apple continues to bolster its music streaming position through acquisitions like Shazam and Asaii, while Spotify is expanding its subscriber base through strategic partnerships.
In the automotive arena, the rise of electric vehicles (EV) and advances in autonomous driving pose significant challenges. Notably, Tesla (TSLA) equips its vehicles with its own entertainment system, bypassing traditional satellite radio systems altogether.
Over the past year, SIRI shares have dropped by 58.5%, significantly underperforming the Zacks Consumer Discretionary sector and the Zacks Broadcast Radio and Television industry, which have seen gains of 11.5% and 45.7%, respectively.
Annual Performance Overview
Image Source: Zacks Investment Research
SIRI stock is considered undervalued, as reflected in its Value Score of B.
It is currently trading at a forward 12-month price/sales ratio of 0.87X, which is notably below its median of 1.26X and the industry average of 3.71X.
Current Price/Sales Ratio
Image Source: Zacks Investment Research
Additionally, SIRI stock trades below its 50-day and 200-day moving averages, a sign of a bearish trend.
Trading Below Key Moving Averages
Image Source: Zacks Investment Research
What Lies Ahead for SIRI in 2025?
Sirius XM continues to grapple with fierce competition within the dynamic audio entertainment sector, raising concerns about its future prospects.
However, the company is making considerable investments in technology, including a new tech platform and 360L technology for more targeted advertising. It aims to have 40% of new car trial starts utilize the 360L platform this year, increasing to over 50% by 2025, signaling potential new revenue avenues.
Sirius XM is also enhancing its content strategy, particularly in podcasting. Strategic acquisitions, such as the Unwell network (which includes “Call Her Daddy”), and continued expansion of exclusive content position the company to leverage the growing podcast market.
Why Investors Might Consider Avoiding SIRI Before Q4 Earnings
Given the multiple challenges Sirius XM faces, including declining advertising revenues and fierce competition, it may be wise for investors to approach SIRI stock with caution ahead of the fourth-quarter earnings report.
With a Growth Score of D, the stock is not appealing for growth-focused investors. Consequently, it may be prudent to steer clear of SIRI before the earnings announcement.
Sirius XM currently holds a Zacks Rank #5 (Strong Sell).
For more insights, check out the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks with Potential to Double
Each of these stocks has been carefully selected by a Zacks expert as a top pick, with the potential to gain +100% or more in 2024. While success is not guaranteed, previous recommendations have seen returns of +143.0%, +175.9%, +498.3%, and +673.0%.
Many of the stocks in this report are currently off Wall Street’s radar, presenting a timely opportunity for investors.
To discover these 5 potential winners, click here >>
If you wish to receive Zacks Investment Research’s latest recommendations, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.
Apple Inc. (AAPL): Free Stock Analysis Report
Sirius XM Holdings Inc. (SIRI): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Spotify Technology (SPOT): Free Stock Analysis Report
To access this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed herein are those of the author and do not necessarily represent the views of Nasdaq, Inc.
