On Thursday, Sirius XM Holdings Inc. experienced a notable surge in stock value, rising more than 42% to $7.72 on significantly higher-than-average volume. The stock was momentarily halted multiple times throughout the trading day due to the volatile activity. But as Sir Isaac Newton would say: what goes up, must come down.
SiriusXM’s shares experienced a significant drop on Friday, decreasing by $1.13, or 14.5 percent, to $6.67 on the NASDAQ Exchange. While some of that dip has recovered, the change has been attributed to a stock short-squeeze scenario, attracting attention from investors with a stake in the company through Liberty Media.
Liberty Media recently completed the separation of Atlanta Braves Holdings into a distinct publicly traded entity. Consequently, Liberty Sirius XM shares will be divided into a new Liberty Sirius XM share and 0.25 share of a new Liberty Live tracker, representing the company’s stake in Live Nation, next month.
Evercore ISI analyst Vijay Jayant highlighted all these fluctuations in a July 21 investment note, where SiriusXM was downgraded to underperform with a reiterated price target of $4.50. “We believe this move is related to a short squeeze in a stock with a small float, rather than any fundamental change in the business,” Jayant wrote.
Days prior, Pivotal Research Group media analyst Jeff Wlodarczak expressed concerns over SiriusXM’s valuation in a July 19 investment note, downgrading SiriusXM to sell. “While the outlook for a soft landing has improved + auto SAAR is headed in the right direction and ’24 results should show a nice improvement, it is frankly very difficult fundamentally to justify this valuation level for SIRI (SiriusXM),” Wlodarczak noted.
Sirius XM will report its Q2 2023 financial results on August 1. Analysts expect the company to report earnings of $0.07 per share on quarterly revenue of $2.24 billion. The satellite radio company has missed its earnings estimates in three of its last four quarters.
Under CEO Jennifer Witz, SiriusXM is banking on the recovery of auto sales and an evolving podcast market to combat a weakening advertising market. Witz shared her concerns on the current market situation at the J.P. Morgan Global Technology, Media and Communications Conference in May.
