For a long time, Warren Buffett's investment vehicle Berkshire Hathaway held shares of Sirius XM (NASDAQ: SIRI). The great investor's investments don't always pan out, and the satellite radio host is likely to continue underperforming.
That is, according to one forecaster who is keeping tabs on Sirius XM's performance. The company's shares, in his opinion, are cheap since they're about to fall by double digits.
Reduced pricing objective by 33% Steven Cahall, an analyst at Wells Fargo, significantly lowered his price objective for Sirius XM stock on April 1. He reduced it by 33 percent, bringing the share price down to $3. At the risk of repeating the obvious, Cahall ranks Sirius XM stock as underweight, meaning to sell, because it's 22% below the stock's most recent closing price.
The general public feels the same way as the corporation isn't increasing its income from any of its channels. The membership fees make up the majority of its top line and remained relatively unchanged in 2023 (at slightly under $6.9 billion)
when compared to the previous year. Ad income remained relatively unchanged as well. Sirius XM does well financially, but the channel's net income remained flat last year as well.
Cahall stated in his explanation for the reduction of his pricing target that achieving the growth that Sirius XM so desperately needs this year will be difficult. The corporation faces competition from audiobook, music, and podcast streaming services, all of which are popular and aggressive. Net subscriber losses, which Cahall significantly raised, might have a devastating effect on the budget if they materialize.
A large moat isn't always a plus. Being the only satellite radio broadcaster in the United States has always been an advantage for Sirius XM. That isn't a very spectacular throne to hold in this day of easily accessible and reasonably priced streaming, though.
Despite being there for a while, the company still hasn't figured out how to compete better or start the growth engine. Cahall made a compelling case to sell the shares, and I agree with him.
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