Why Did Sirius XM Stock Fall 10.3% on September 24?



Sirius XM stock fell 10.3%

In this series, we’ll look at technology stocks that lost significant market value yesterday. We’ll also look at analysts’ recommendations for these stocks, and we’ll compare the price target estimates to see the potential upside value after these price declines.

Sirius XM Holdings (SIRI) stock fell 10.3% on September 24 and closed trading at $6.26 per share. Sirius XM lost ~$3.0 billion in market value on the day. SIRI stock is currently trading 21.0% above its 52-week low of $5.17 and 19.0% below its 52-week high of $7.70. The stock has gained 17.4% in 2018, despite a 10.0% decline yesterday.

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Sirius XM set to acquire Pandora for $3 billion

The stock price of the $28.0 billion satellite broadcaster was hit as it agreed to acquire music streaming company Pandora (P) for $3.0 billion. As a result, Sirius XM is expected to be valued at more than $30.0 billion, similar to music streaming giant Spotify (SPOT). Pandora stock fell 1.2% on September 24, and Spotify stock rose 1.1% on the day.

Sirius XM aims to expand its offerings with this acquisition. Although Pandora has a user base of 76.0 million, only 6.0 million users are paying subscribers. Sirius XM has 36.0 million paying subscribers, and Spotify has more than 83.0 million paying subscribers.

This acquisition is expected to close by the end of the first quarter of 2019. Pandora is expected to post revenues of $1.55 billion in fiscal 2018, an increase of 5.6% year-over-year. However, Pandora is still grappling with losses as analysts expect the company to post non-GAAP EPS of -$0.54 in 2018.

Analysts’ estimates

Of the 18 analysts covering Sirius XM (SIRI), eight recommend a “buy,” eight recommend a “hold,” and two recommend a “sell.” The average 12-month price target estimate is $7.02, indicating that the stock is trading at a 12.0% discount to its average estimates.


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