What Will Happen to Sirius When It Reports Earnings?

Jul.22.09 | About: Sirius XM (SIRI)

By Gino Lattarulo

siri

With the next Sirius (NASDAQ: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 (NASDAQ: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 (NASDAQ: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