Sirius XM Radio Inc. (SIRI) has done what many thought was impossible: It has broken above the $1 mark and stayed above it. It now looks as though SIRI is even back under Nasdaq (NASD) listing compliance. That would keep it from having to proceed with the reverse stock split.
Sirius has already telegraphed that it added 171,441 net subscribers in its first quarter, and the churn rate fell to 2%, down from 2.2% a year earlier. And its conversion rate popped from 44.6% a year earlier to 45.2% in this last quarter.
All of this is coming ahead of the quarterly earnings report set for Tuesday morning. Thomson Reuters has estimates of breakeven (rounded) earnings and revenues of $671.3 million.
The prevailing issue is that Sirius has close to 3.8 billion shares outstanding, and that figure would be almost 6 billion shares if you converted the preferred stake from Liberty Media (LCAPA).
The biggest point will be the subscriber acquisition costs, meaning how much the company has to spend on ads and additional costs to gain new net subscribers.
The stock hit a 52-week high of $1.25 today, even though shares have backed off. The 52-week low is 30 cents, but it traded under 10 cents at the major selling peak of the past 18 months.
The SIRI May 1.50 Calls (QXO 100522C00001500), which traded for 2 cents to 4 cents today, would require a $1.54 price to even breakeven on an intrinsic basis, but the pop would likely be more if SIRI trades up after earnings.
On a deleveraged basis, this is a low-risk/high-return possibility if the critics and doubters start to change their tune.
And tomorrow should very easily see 100 million shares trade.
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