Sirius XM Radio (SIRI) shares jumped as high as $2.12 this morning on breaking news. Last week I wrote an article about the company, saying that Q2 might bring some great sub results. Well, Sirius fans, here is the good news:
Sirius XM Radio today announced that it added 622,042 net subscribers in the second quarter of 2012, up 38% from 452,147 net subscribers added in the second quarter of 2011. The company has added over 1 million net subscribers in the first half of 2012. As of June 30, 2012, the company had over 22.9 million subscribers.
This was the announcement that Sirius bulls had been waiting for. And the timing is perfect for the imminent short squeeze. There are currently almost 300 million shares that have been sold short. To add to the good news, it increased its guidance:
The company also increased its full-year 2012 subscriber and revenue guidance. Sirius XM now expects its net new subscriber growth to approach 1.6 million and revenue to approach $3.4 billion in 2012. Adjusted EBITDA guidance of $875 million and free cash flow guidance of $700 million remain unchanged.
Since it added over a million subs the first six months of 2012, I think this new guidance is still very conservative. Sirius should easily top 2 million subs by the end of December. This will also add even more to the bottom line. According to Sirius XM CEO Mel Karmazin:
Sirius XM continues to demonstrate robust growth and strong operating execution despite a challenging economy. Our second-quarter subscriber gains mark a record quarter of net additions since the merger of Sirius and XM in July 2008. While we continue to be conservative in the face of a weak U.S. economic outlook, customers continue to embrace our unparalleled programming lineup, allowing us to raise subscriber guidance for the second time this year.
|Jul 9, 2012||2.11||2.12||2.07||NA||NA||NA|
|Jul 6, 2012||2.08||2.09||2.02||2.05||29,703,600||2.05|
|Jul 5, 2012||2.04||2.13||2.04||2.09||52,373,400||2.09|
|Jul 3, 2012||1.99||2.08||1.98||2.04||53,486,800||2.04|
|Jul 2, 2012||1.84||1.99||1.84||1.99||67,807,700||1.99|
|Jun 29, 2012||1.88||1.89||1.82||1.85||37,077,600||1.85|
Sirius has jumped over 15% in the last five trading days. A lot of bloggers have attributed this rise to Liberty Media (LMCA) buying shares on the open market. However, as I mentioned in the article above, I think the jump is due to leaks about an awesome Q2. And the new car sales are up dramatically, which means the subs will continue to go higher for at least another three months. Some experts think that automobile sales for 2012 will be the highest we have seen since 2007.
What we don't know yet is how much of this sub growth is due to the following: used car sales, Howard Stern on "America's Got Talent," Internet apps, new Sirius content (i.e., sports), and the portable 2.0 Lynx. Hopefully we will find out more on the Q2 conference call scheduled for Aug. 7 at 8 a.m. ET.
As I have said in the past, it is very dangerous to short a company like Sirius XM that continues to crank out record-breaking results.
Disclosure: I am long SIRI, and I will continue to buy SIRI on the dips.