"It's the economy, stupid"
This phrase which is often repeated with minor modifications from Bill Clinton's 1992 campaign vs. George H. W. Bush has become part of popular culture, and convenient to use when explaining some things that are readily apparent, but people just don't seem to be getting.
In the case of Sirius XM's (SIRI) performance over the past few days, the statement:
"It's the market, stupid"
Provides a fitting explanation for recent share price gyrations. Even my highly skeptical friend Fred Norris had to agree that it was hard to argue with what I am about to type below. You see, Fred's a little skittish when it comes to his investment in Sirius XM. Every time it drops a penny or two he's always looking for a scapegoat as to why the price is not simply going up up and away.
It's the market, Fred.
Investors would do well to "get smart" here and understand the reality of what is going on instead of looking in closets for skeletons or under beds for demons which are simply not there. The fact of the matter? Nothing has changed with Sirius XM. Investors need to understand that individual stocks like Sirius XM do not exist in a bubble and are not immune from the overall weight of the market.
Take a look at the following chart. I warn you, it looks confusing for a very important reason.
"Whoa whoa stop the clock!"
You might be saying. Just what the heck is going on there? That's too hard to read, right?
There's a reason for that. This is a simple plot of two charts over the last 50 days. One being Sirius XM, and the other being the SPDR S&P 500 Trust (SPY) which tracks the S&P 500.
The reason it's impossible to discern which is which when the charts are on overlay and the same color? Because they follow near exact patterns with near exact daily activity. Not a soul can look at the above chart and tell me that the two are not behaving in near harmony.
Engineers and sales staff in Apple's iAd business have been charged with supporting the new digital-radio service, which the company plans to debut as early as June 10 at its annual developers conference, said the people, who asked not to be named because the moves aren't public. The music service won't be publicly available until later this year, when Apple's iOS 7 mobile-operating system is released, one person said.
Apple Chief Executive Officer Tim Cook is shifting how the company courts advertisers after failing to make much headway against Google Inc. (GOOG) in the $4.11 billion U.S. mobile-ad market. Apple will seek to land big brands for the new streaming-radio service -- akin to Pandora Media Inc.'s (P) business model
Thus, this has nothing to do with Google's entry in the internet radio space which is by now, old news.
Following the heels of Twitter's new music service launch last month, Google has also entered the streaming music fray with a music service of its own. Dubbed Google Play Music All Access (don't really roll right off the tongue, we know), this is also a way to discover music, but also listen to, store and share great music on your Android device or on the web.
Thus, this has nothing to do with the multi year old argument that Pandora will be the demise of Sirius XM.
It's the overall market. So don't be "stupid" and fall for the trap of believing the hype of those looking to place blame on anything other than the market.
As I have repeatedly stated, investors should seek buying opportunities in Sirius XM and the current market gyrations may offer attractive short term entry points. With Sirius XM's $2 billion buyback plan running full swing, these gyrations may even offer the company lower pricing on share repurchases. This may in fact provide greater benefit due to lower average share purchase prices (and thus higher numbers of shares purchased) for the company's buyback.
That's good news for longs who are willing to hold. While some may be disappointed that prices have not hit my short term $3.75 target, I'd argue that such prices are coming, and sooner rather than later.
Certainly sounds foolish the lower the share price goes, doesn't it? But I write for the long term holder. I write for the investor, and not the trader.
That said, I have two words when it comes to lower share prices on Sirius XM for the long term investor.
Additional disclosure: I am long SIRI January $2 and $2.50 calls. I may be selling part of my SIRI position to enter short term plays for a couple days between now and the first two weeks of June.