Sirius XM Weekly Recap
It was another week of bucking trends for Sirius XM Radio (NAS: SIRI) , and shareholders couldn't be happier. For the second week in a row, shares of the satellite-radio provider moved to hit new four-year highs despite a sharp drop for the Nasdaq Composite.
Sirius XM managed to hit an intraday high of $2.97 on both Thursday and Friday. That's the highest level Sirius XM has seen since March 2008. For those scoring the timeline at home, March 2008 was four months before the merger between Sirius and XM was completed.
In other words, we're looking at another post-merger high.
The big news this week was another bullish analyst note with a head-turning price target. Bank of America Merrill Lynch added the media giant to its U.S. 1 List of stock recommendations, and the juicy part here is the $4 price target.
Investors shouldn't expect these weekly upbeat missives to continue, but they're certainly welcome events as they happen.
"Mel" rhymes with "sell"
Earlier this year, Mel Karmazin initiated an automated selling plan to diversify out of his substantial position in Sirius XM. Another chunk of that sale took place this week, as the CEO exercised 7.3 million options at $0.43 a share, and they were sold in the open market at $2.81 a share.
Obviously, insider selling isn't a good sign, but it doesn't have to be a negative one. Company executives who find too much of their portfolios tied to corporate stock often take a little bit off the table. Given the likelihood that capital-gains taxes will rise -- and possibly dramatically -- for Karmazin next year, it makes sense to raise money now.
Perhaps more importantly, Karmazin's wrapping up his trades yet the stock has continued to hit new highs. In other words, these monthly sales haven't held Sirius XM back.
Microsoft pops a quarter in the jukebox
Sirius XM is still on track to roll out its music-discovery service later this year, but it won't be merely competing with Pandora (NYS: P) and Spotify.
Microsoft (NAS: MSFT) introduced Xbox Music on Monday. Despite the name, the new music platform won't be limited to video-game consoles. Sure, it rolled out to the diehard gamers on Xbox Live in a Tuesday update, but Xbox Music will also be available to buyers of Windows 8 PCs and tablets and Windows Phone 8 smartphones later this month.
It will be preinstalled as the default music player on Windows devices, and the heart of the service will be a free ad-supported streaming catalog of 30 million tracks.
Microsoft is trying to be the master of all trades here. Xbox Music will be like Pandora in that listeners can discover new music based on artists they already like, but they can also do what Spotify users do in selecting individual tracks and making playlists. Apple's (NAS: AAPL) iTunes Music Store is also in the mix, as Xbox Music will let users buy MP3 downloads.
The free nature of the service will be appealing, but there's also an Xbox Music Pass that will set premium accounts back $9.99 a month for cloud-based portability and enhanced features.
This is where Sirius XM will have a value advantage, at least as it pertains to premium accounts, since it costs far less for Sirius XM subscribers to add streaming to their existing receiver-based subscriptions than it does to take out a premium account through Xbox Music, Pandora, or Spotify.
The competition won't end here, of course. Reports surfaced a few weeks ago that Apple is negotiating with music labels to launch a streaming service of its own.
For now, Sirius XM investors don't have to worry about this. It's an incremental revenue stream if it does materialize, and the fast-growing appeal of Pandora and proliferation of smartphone owners on iTunes haven't slowed Sirius XM's satellite-radio appeal.
There's never a dull week in satellite radio!
Running of the bulls
Despite being one of the market's biggest winners since bottoming out three years ago, there is still some healthy upside to be had if things go right for Sirius XM -- and plenty of room to fall if things don't. Read all about Sirius in our brand new premium report. To get started, just click here now.
The article Sirius XM Weekly Recap originally appeared on Fool.com.Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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