It was simply a matter of time. With auto sales tracking as good as they have been, it was only a matter of time before Sirius XM would have a quarter with monster subscriber additions. That is exactly what happened to Sirius XM (SIRI) in Q2 of this year. The company announced today that Q2 of 2013 brought with it 715,000 net subscriber additions. This impressive number is a post-merger record. In addition, the company raised the full year outlook on net additions from 1.4 million to 1.5 million. The company guidance of 1.6 million self paying additions remained the same.
Through the first 6 months of the year Sirius XM has added 1,208,000 subscribers. This would imply that through the remaining 6 months that only 300,000 more subscribers are needed and that the net subscriber guidance is woefully low. There is a reason for that.
One of the biggest contributors to the subscriber addition pool is General Motors (GM). Under the current deal between the companies, satellite radio equipped GM cars are counted as net subscriber additions when a car is sold. A new deal will take shape in Q4 where the subscribers will no longer be counted at the time of sale, but rather 3 months later, and if the consumer becomes a self paying subscriber. Essentially the Q4 subscriber number will not look good in comparison. If you think about it, the company is keeping guidance very conservative. It essentially will beat the guidance in Q3 and then Q4 can simply be gravy.
So why switch the GM deal if it impacts the sub numbers? Because it is a better deal financially for years to come compared to what equates to only one nasty quarter in terms of sub growth. That is another reason the company is shifting focus to self paying additions as well.
With that being said, the company is on very sound footing and seems poised to announce great quarterly numbers in the next several weeks. If Sirius XM does not pass a 52-week high today, it may well do so in the very near term. I have been informing the premium members to my website about the recent bullish stances this company is exhibiting. Stay tuned.