Sirius XM Faces Struggles Amid Broader Market Growth

Sirius XM Holdings stock (NASDAQ: SIRI) has dropped 53% this year, while the S&P index has risen by 28%. In comparison, SIRI’s competitor Apple (NASDAQ:AAPL) shares have increased by 29% this year. What is behind Sirius XM’s underwhelming performance?

The audio service provider is grappling with weak revenue and adjusted EBITDA figures. Although Sirius XM has maintained its revenue guidance for fiscal year 2024 at $8.675 billion, it has lowered its revenue forecast for fiscal year 2025 to $8.5 billion. The company’s growth has stagnated in recent years, culminating in a 0.6% revenue decline in fiscal year 2023—the first such drop in its history. Further, it predicts a second consecutive year of revenue decline, highlighting the need for effective strategies to enhance growth.

Current challenges include slow recovery in the automotive market and negative trends in advertising. Additionally, Pandora struggles to stabilize its monthly active users and listening hours. Financially, Sirius XM carries around $11 billion in debt, which adds to its difficulties.

In its latest Q3 report, Sirius XM revealed a 2% year-over-year decline in total subscribers, totaling 33.2 million, including paid promotional accounts. However, the self-pay monthly churn rate held steady at 1.6%, suggesting that the company retains its subscribers effectively. To stimulate growth, Sirius XM may need to concentrate on enhancing its content to compete with larger rivals.

The company’s stock history has been disappointing, recording losses in three consecutive years: 0% in 2021, -8% in 2022, and -6% in 2023. On the other hand, the Trefis High Quality (HQ) Portfolio has shown less volatility and outperformed the S&P 500 each year during that period. With current economic uncertainties—such as interest rate fluctuations and global conflicts—investors wonder if Sirius XM will replicate its past performance or rebound positively in the next year.

For Q3 2024, SIRI’s revenue decreased by 4% year-over-year to $2.17 billion, slightly missing analyst expectations of $2.19 billion. The slump stemmed from a 5% fall in subscriber revenue to $1.65 billion and a 2% drop in advertising revenue to $450 million. The company reported a net loss of $2.5 billion for the quarter, resulting in a diluted EPS of -$8.74, a stark contrast to the net income of $234 million the previous year. Additionally, adjusted EBITDA fell by 7% year-over-year to $693 million, reflecting softer subscriber earnings.

Looking ahead, we project Sirius XM’s Revenue will reach nearly $8.7 billion for the full year 2024, a 3% decline from the previous year. Revenue per share is expected to be $25.62. Consequently, our Sirius XM Valuation has been adjusted to around $27 per share, based on the anticipated RPS and a 1.1x P/S multiple for fiscal 2024—aligning closely with its current market price as of December 15.

Sirius XM anticipates full-year revenue of about $8.675 billion, an adjusted EBITDA of roughly $2.7 billion, and $1 billion in free cash flow for 2024. The company completed its merger with Liberty Sirius XM Group in September and executed a 1-for-10 reverse stock split during the same period.

It’s useful to compare Sirius XM with its peers. For insights into how its competitors perform, visit our Peer Comparisons page for valuable metrics across the industry.

[1] Returns as of 12/13/2024
[2] Cumulative total returns since the end of 2016

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.