Analysis

Why SiriusXM Radio Stock Was Falling Today

Shares of the satellite radio operator pulled back on a middling earnings report.

Shares of SiriusXM Radio (SIRI -7.26%) were pulling back today, after the satellite radio provider posted middling results in its first-quarter earnings report. Though it topped revenue estimates, full-year guidance was below expectations, and underlying growth remained weak.

As a result, the stock was down 4.9% as of 12:27 p.m. ET.

Image source: Getty Images.

Sirius struggles to grow

Sirius continued to lose self-pay subscribers, falling 359,000 to 33 million because of a decline in trial starts at the end of 2023 and higher self-pay monthly churn at 1.7%.

Overall revenue fell 1% to $2.16 billion, which edged out estimates at $2.12 billion, but revenue from SiriusXM fell 1% to $1.7 billion. Growth at Pandora was slightly better. Ad revenue growth was a bright spot up 7%, compared with a 1% drop in subscription revenue.

On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 4% to $650 million, and earnings per share improved from $0.06 in the quarter a year ago to $0.07.

CEO Jennifer Witz said, “I’m pleased to share solid first-quarter financial results, underscored by record ad revenue for a first quarter and strong consumer engagement with our newly released content.”

What’s next for SiriusXM

SiriusXM stock has essentially been stuck in neutral over the past decade, and the acquisition of Pandora has not delivered the jolt to the stock that some investors were hopeful for.

Looking ahead, the company reiterated its 2024 guidance, calling for revenue of $8.75 billion, down 2.2% from 2023 levels. It also sees adjusted EBITDA of $2.7 billion and free cash flow of $1.2 billion.

While those are solid numbers for a company with a market cap of $11 billion, the revenue forecast was slightly below the consensus at $8.79 billion, and the growth concerns continue to weigh on the stock.

Until it returns to subscriber growth and delivers top-line growth, SiriusXM stock is likely to struggle.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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