Sirius XM Shares Sell Off Following Weak Subscriber Data

Sirius XM total subscribers grew to a record 32.167 million in Q3.

Self-pay subscribers also reached a record 26.986 million.

Total subscriber growth of 119,000 was the smallest increase since Q4 2013.

When Sirius XM Holdings (NASDAQ:SIRI) released its third-quarter results last week, it was easy to see all the records. One only had to look at the bullet points at the top of the press release:

• Third Quarter Revenue Climbs 8% to $1.4 Billion
• Quarterly Net Income Increases 42% to $276 Million; Diluted EPS Grows 49% to $0.06
• Adjusted EBITDA Grows 12% to a Quarterly Record of $551 Million and Margin of 39.9%
• Quarterly Operating Cash Flow Rises 24% to $521 Million
• Free Cash Flow Grows 22% to a Quarterly Record $434 Million
• Self-Pay Net Subscribers Increase 311,000 to Reach Approximately 27 Million

 Many of the records were expected, especially new highs in revenue, total subscribers and self-pay subscribers. What may not have been expected was the low level of growth in total subscribers, which grew by just 119,000. That was the smallest increase since the fourth quarter of 2013 and may help explain why the shares are trading almost 4% below the level reached the day before earnings were released.

As noted above, it was the smallest total subscriber increase since the end of 2014, when total subscribers actually declined by 22,756, although there were special circumstances around the Q4 2013 decline. That drop was the result of a large OEM moving from the paid promotional trial program to the unpaid trial program. The OEM was widely believed to be General Motors (NYSE:GM), although that has never been confirmed by either company. As far as buyers of GM vehicles were concerned, there was no difference in the free trial they received when they purchased their car or truck - it remained at three months.

Source: seekingalpha