When one of my holdings surprisingly drops 10% in one day, as SiriusXM (SIRI) did yesterday, I start scrambling around looking for a reason. The reason I use the term "surprisingly" is because I typically listen to WBBR on my radio in the background for a large part of the day. If I hear them talking about one of my stocks, I immediately start paying attention. As a result, I often know which stocks will be making a large move even before pre-market trading opens. But yesterday I either missed what caused the Sirius drop, or there was no significant story.
Lacking a starting point, I will typically go to the company's website, and if I don't find a press release or a filing that can explain the move, I start looking elsewhere. There are several websites where I will look, starting with Yahoo Finance (which includes any Seeking Alpha articles), Schwab and Bloomberg. In this case I still hadn't found anything. I was getting frustrated and found it difficult to just dismiss this as "one of those things."
Then, while reading through some generic financial headlines and articles, I came across a video on Forbes' website. John Dobosz, a Forbes editor, was discussing many stocks on a segment called "Market Blaster" and titled "Sirius Slammed. Netflix Extends Breakdown." The clip began with the good news about first-time claims for unemployment falling below 400,000 and the upward revision to Q2 GDP and some good news from Germany about supporting the Euro.
After briefly discussing Amazon (AMZN), Dobosz went on to talk about the partnership between Spotify and Facebook. At this point he was talking much less like an analyst and much more like a fan of the service, noting how he could go in and listen to entire albums, and lauding the quality of the sound. He also noted he was a user of Pandora (P), and then a picture of Howard Stern pops up and he said if he were Howard Stern, he would start worrying about his investment in Sirius. He also said, "Why pay for satellite radio when you can get Spotify for about half the price?" He then went over a chart of Pandora, pointing out its stock price recovery.
Then came the chart showing "Sirius gets slammed," down 10% and down much worse from its high back in May. He closed with some quick recaps of other big losers -- Baidu.com (BIDU), Netflix (NFLX) and gold.
There are certainly some Spotify users that are unhappy about the Facebook privacy issues, and the Spotify tie to Facebook was not new news. However, the unsolicited endorsement of the service tied to the negative comments about Sirius and the positive comments about Pandora are as close as I could come to an explanation for the 10% Sirius price drop. I would have rather seen a more substantial explanation, but for now, I guess this video will have to do.
Disclosure: I am long SIRI.
Additional disclosure: I also have $3 January 2012 covered calls against most of my Sirius position. I may initiate (or close) a buy stock/sell option position discussed in another recent article at any time. I have no position in any of the other companies noted in this article.
