What Will Happen to Sirius When It Reports Earnings?

By Gino Lattarulo

With the next Sirius (SIRI) earnings report to come out August 3rd, initial estimates are ranging from -0.01 (low), -0.013 (mid) and -0.02 (high).

As we all know, earnings numbers don’t coincide with price action too much, but this earnings event will be particularly interesting to me because of all the recent press that Sirius XM Radio has been getting. Articles from stock manipulation, options volume, new revenue streams like the Apple (AAPL) iPod app, the used car market and debt re-structuring have made SIRI’s price action go crazy. With volatility at almost 90%, it is going to continue to be a wild ride.

So the question is what will happen? Will it shoot up ? Shoot down? Stay in a channel? Well I can honestly tell you that it will be one of the three. I can hear you all now, “Thank you captain obvious”, right?

What I really think will happen is that unless there is news that is shocking to the world, the stock price will likely experience the same push-pull panic buying and selling that it has for the last two quarters and then settle back near its current price range. Barring an unseen catastrophe or shocking earnings report, there is no significant event that I foresee in the near future to drastically move SIRI in any one direction. As much as anyone, I would love to see it blast through the $1.00 range all at one time, but the realist in me says that it will be a slow grind. Virtually every analyst and investment house out there is making it a point to find reasons to beat this stock down until they have unloaded their short positions at a good price. Whoops! Did I just write that? My inner monologue must be on the fritz.

I think we all know that subscriber numbers are going to come in on the negative side and retail sales are not hitting any home runs. The positive news is that SIRI is continuing to move forward with growth strategies such as the recent deals with the likes of BMW and Volkswagen. The stock recently was rated a buy by Gabelli & Co. which stated,

“while still speculative, they believe Sirius XM now represents an attractive equity investment.”

Gabelli is also alluding to the possibility of SIRI partnering in some fashion with DirecTV (DTV) or Dish Network (DISH). Whatever happens, there is a firm belief out there that growth and profitability are around the corner. It is just going to be a waiting game.

So strap yourselves in nice and tight for the next earnings ride ladies and gentleman. Grab your barf bags and fill the PEZ dispensers with Rolaids because it’s going to be another screamer.

Disclosure: Long Siri, no positions in AAPL, DTV, DISH

Comments

[R A F:]

I continue to believe the market response will be biased toward longer term technical strength. Markets will probably interpret this release as reflecting the "old news" of an extremely negative first half of '09 (auto bankruptcies, etc), while recognizing that the extremely positive future potential of new developments such as the iPhone relationship, re-emergence of the auto industry and expanding relationships with key manufacturesrs that all have yet to come on stream. This combination of news should lead markets to discount past negatives while accentuating future positives. This bias shoud sustain underlying support on pullbacks through this period and lead to subsequent recoveries once support has been seen to contain the downside. The technical formation of SIRI projects potential toward 1.00+ over the next six months to one year and upside potential remains significantly greater than downside risk, based upon the current technical framework. Likewise - the technical formations of all major equity indices (DJ30, S&P500, Nasdaq) all have gained strength and project further gains through yearend. This should reinforce the positive potential for SIRI through this period of time.

Jul 22 08:03 AM

[Trolly:]

Hey Chief,

This is the third article I have seen from you (Brandon) just today on SIRI. I know you disclose your position as long, but you are so dam obvious that you need to make the stock move up. I'm sorry you got hung out to dry on it but all these articles on why we should get into the stock is borderline deceitful on your part. You may want to take your loss and move on so you can at least tout another stock you want to move so you don't look so desperate.

Jul 22 08:28 AM

[1more4me:]

Now Trolly- that's just mean. This article was written by Gino (slow down and read the very top...) And- Gino is usually neutral and puts out good info and opinion. (except for posting the High and Low estimates backwards...) Brandon does lean pro Siri but don't fault to the point of insult- it's all opinion. Besides, we all want it to move positive becasue as American's we believe that hardwork and integrity are the fundamentals to a productive and continuing free market society where each and every one of use can achive those dreams for our children and ourselves given sdfaggh....oh-crap! I forgot to rest my limit orders....gotta go. PEACE.

Jul 22 10:20 AM

[sclem7:]

You really believe that. "Schmuck!" Wake up and smell the coffee. The stock price isn't still at .39 because of the American dream, mom's apple pie and the girl next door. Who was it that said there's a sucker born every minute, P.T. Barnum. Don't look now but another one has just been hatched.


On Jul 22 10:20 AM 1more4me wrote:

> Now Trolly- that's just mean. This article was written by Gino (slow
> down and read the very top...) And- Gino is usually neutral and
> puts out good info and opinion. (except for posting the High and
> Low estimates backwards...) Brandon does lean pro Siri but don't
> fault to the point of insult- it's all opinion. Besides, we all
> want it to move positive becasue as American's we believe that hardwork
> and integrity are the fundamentals to a productive and continuing
> free market society where each and every one of use can achive those
> dreams for our children and ourselves given sdfaggh....oh-crap!
> I forgot to rest my limit orders....gotta go. PEACE.

Jul 22 10:46 AM

[1more4me:]

Hey sclem7,
You must be that sucker you speak of. Are you unable to comprehend sarcasm? Please try harder. I got a cup of fresh Kona right here to the left of me, My dream of a 3,660 sq ft home on 200 acres, 1 lake house on a 5 acre point, a camp in Colorado, 4 vehicles, 3 boats, 2 kids, 2.2 mil in other real estate and long term investments, a career where I give advice to suckers like you, and enough money and free time to "PLAY" trades on stocks in volumes you probably could get with a double mortgage and all the "friend" loans you could beg for- don't like apple pie, and did the girl next door when you were wakin off to faint image of some chick I'd call ugly that tops the list in your spank bank. Now shut-up- buy some more SIRI so it'll jump up a penny or two and I can rape another couple grand off of it by the end of the day. THEN come back and PLEASE try harder.
PEACE

Jul 22 11:43 AM

[connorport:]

One thing that may come out of Q2 is a better projection of Q3. On target, not quite on target, whatever it may be will be what pushes or pulls the stock. Everyone's pretty much got this recession thing and understands what effect it has on companies but the ones that prosper in this environment will be the chosen ones for investors. Even the thought of prosperity in this environment makes stocks run and tank on the same day. One thing is for certain. There's not much to lose at this point in the SIRI game and a move upward is almost positive over the next few Q reports.

Jul 22 12:52 PM

[connorport:]

SIRI stock at todays price is like holding a lottery ticket with 70/30 odds to the positive. I'll take that ticket anyday.

Jul 22 12:55 PM

[*Newman*:]

Hey Trolly:

Satwaves has 5+ authors writing for it. All of the authors post under the Satwaves name, and all have their own byline. This post was done by Gino. There is also Brandon Matthews, Demian Russian, Rick King, myself (David "Newman" Phillips") as well as several guest articles.

Try reading a little bit before automatically jumping to conclusions.

- David "Newman" Phillips
www.satwaves.com

Jul 22 01:47 PM

[Duedil:]

SCLEM7, P.T. BARNUM never said those words. Know your subject matter before making False Statements!

Jul 22 02:15 PM

[wcorowitz:]

come to satwaves.com this place is dead


www.satwaves.com/forum

Jul 22 02:48 PM

[Gino Lattarulo:]

Hey Chief,

Brandon Didn't write this. Look at the Author at the top of the article. Find out what you are talking about before you open your mouth.

Jul 22 04:03 PM

[Gino Lattarulo:]

The estimates are accurate within the source they were taken from.

Jul 22 04:14 PM

[R A F:]

SIRI has a massive short position (194,820,020 shares as of 6/30) and this definitely represents potential buying power on any pullbacks occurring on this earnings release. The short position has increased by roughly 33 million shares since March 13, during which time the stock has been essentially in a holding pattern from .33 to .39 (ranges and closes about 80% of the time). In sum -markets are now more aggressively testing the upper level of this band while the short position has increased - suggesting legitimate investor demand is being offset by professional trading firms continued shorting of the stock. The next short position report will be tomorrow (7/24) covering the period from 6/30 to 7/15 and this will be closely scrutinized, as this short condition definitely represents a major source of buying power on any pullbacks that might result from the upcoming earnings release. There is no doubt that this condition is the product of manipulation of the stock by professionals, as approximately 4 billion shares will have been traded through this 4 month narrow holding pattern and there is no way legitimate investors would be making buy and sell decisions of this magnitude within such a narrow price band over a prolonged period of time. Assuming most legitimate investors are now long term holders, awaiting the benefits of the positive developments that have recently begun to emerge for Sirius XM, the holders of these massive short positions should become increasingly nervous to cover. Each 1 cent increase on a short position of 195 million shares represents a loss of $1,959,000.

Jul 23 07:04 AM