Satellite-radio operator Sirius XM may not be the growth stock it was more than a decade ago. Still, it’s built a business model designed to grow cash flow and operating margin over time. What makes Sirius XM unique is its subscription-based model. Sirius XM generates most of its sales from satellite radio subscriptions. This is important because contractions and recessions are an inevitable part of the economic cycle.
When the U.S. economy heads in reverse, ad revenue dries up quickly. By comparison, Sirius XM grew subscription revenue in 2020 by adding 909,000 net users for the year. Unfortunately, no stock can keep climbing forever. The Pandora acquisition that closed in early 2019 inflated results for a few reports, but now that we’re back on an even playing field, the gradual deceleration is becoming clear again.
Revenue rose a mere 3.2% in 2020. We weren’t driving a lot during the pandemic shelter-in-place phase, which naturally resulted in more people turning off their satellite radio subscriptions. We’re driving again in 2021, something that’s evident given the recent uptick in gas prices. The economy is growing, something that should help drum up a surge in ad revenue and improve the platform’s churn rate. Can Sirius XM break from this new run of a meandering stock price and top-line growth in the low single digits?
This incredible stock was hiding in plain sight—here’s what you need to know
Recommended Link:
Perfect Stock Caught Trading Under Secret Name
This is just bizarre…
We have just uncovered perhaps the most unusual stock we’ve ever seen.
It’s expected to see massive revenue this year – $100 billion.
The company holds over 29,000 patents in the U.S.
It pays an enormous dividend.
And yet…
It’s ultra-cheap – less than $3.
Top headlines you shouldn’t miss
Today’s stock growth has been proven to be resilient during the pandemic
Two hot entertainment stocks to buy nowAre these the best entertainment stocks to watch?
Whether you use the stock trading platform or not, these companies have big potential
Four industrial stocks to watch this month
Three stocks to watch in the coming week
It’s never too late to start saving,
Gordon Fox
P.S.
Know someone who’d love the Never Too Late Investor? Be sure to send them to this link so they can get signed up: investinglate.com