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Why is Sirius XM Down 14% This Month

Car radio player

Sirius XM Holdings Inc (NASDAQ:SIRI) recently released their plans to acquire the popular music-streaming app company, Pandora Media (NYSE:P).  Sirius XM is one of the largest satellite radio providers in the United States specializing in automobile satellite radios.  Pandora Media has they Pandora app which around 71.4 million active listeners and close to 6 million subscribers.

The acquisition is set to be an all-stock deal for the tune of $3.5 billion.  The deal is anticipated to close in the first quarter of 2019, pending Pandora’s “go-shop” period does not result in a new offer or deal.

To Sirius XM, the Pandora acquisition opens them up to yet even more customers in which they can market to.  This bet on the music-streaming market is, in our opinion, a smart move by Sirius as many users are “cutting cords” and minimizing on traditional services such as satellite television.  This cord cutting sensation can easily translate to the radio and music industry as many my find the Pandora app more beneficial than a Sirius XM subscription.

The company brought in actual revenue of $1.467 billion in 2017 and has over 70 million active listeners.  This, coupled with Sirius XM’s existing 36 million-subscriber user base, would make Sirius XM the world’s largest audio entertainment company.

It’s apparent that investors are not particularly happy about the news of the new acquisition.  In turn, shares of Sirius XM have been beaten down over 10% in the last two days as the news becomes more available and investors react.

Shares of SIRI have been getting punished by investors since the news of the acquisition was made public.  SIRI has not seen negative price action this serious in nearly 7 years since it was last hit hard in 2011.  Shares have dropped nearly 12% in the past two days, from a close of $6.98 on last Friday to lows of $6.16 today.

Does SIRI have a chance to turn around and bounce off this news, or have the investors spoken?

 

 

 

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