LSXMB - Sirius XM: The Moat Is Eroding As New App Not Yet Delivering
2024-05-21 06:23:36 ET
Summary
- Sirius XM is going through a consolidation with its parent entity Liberty SiriusXM, which could increase its valuation multiples.
- The core business of Sirius XM is weakening as it faces more competition in content markets.
- The leverage of Sirius XM is a concern, with a significant amount of debt that could restrict its ability to pay dividends and buy back shares.
Sirius XM ( SIRI ) is a satellite radio operator currently going through a consolidation with its parent entity Liberty SiriusXM ( LSXMK ). The integration is expected to make this stable and cash-generative business more accessible to yield-seeking investment funds, potentially increasing the valuation multiples at which it trades. On top of this, LSXM currently sells at a discount to the value of the SIRI shares it holds, and the transaction will close this gap.
We are holders of LSXM, as we intend to benefit from the rather low-risk returns attainable from corporate action, on the other hand, we are not convinced that SIRI would be an attractive long-term holding. We believe that the core business of SIRI is weakening while it tries to branch out to different content markets, where competition is a lot more intense. Even the potential benefits of increased liquidity on the valuation of the stock are elusive due to the lack of industry peers to compare SIRI against....
Sirius XM: The Moat Is Eroding As New App Not Yet Delivering