Siriusxm holdings(Nasdak: Siri) Not exactly a preferred investor now, and it is easy to know the reason. The base of subscribers to the satellite radio leader reached its peak in 2019 and does not go in the right direction, with a decrease in about 303,000 self -wage subscribers in the first quarter of 2025 alone. In addition, revenues recently decreased, by about 3 % a year -on -year decrease in 2024. profitability is also heading in the wrong direction, with a 33 % free criticism over the past two years.
As shares have decreased by more than 60 % since the beginning of last year, investors do not seem to trust in the company as well.
However, I have a little contradictory here. Siriusxm is a very profitable work at the moment, and management does not sit exactly not to do anything. With a very low rating, it can now be a smart time to take a closer look. In fact, I expect that over the next five years, Siriusxm will overcome S & P 500Total returns.
Photo source: Getty Images.
The first phase of the Siriusxm transformation plan focused mainly on the reduction of costs, and after a few years, the company has done a great job in this field. In the first quarter, Cyrus recorded a decrease in sales and marketing expenses on an annual basis, and a 15 % decrease in products and technology costs.
Between 2023 and 2024, Siriusxm achieved about $ 350 million of total savings, aimed at reaching $ 200 million in savings in interest rates by the end of 2025, and continuing to decrease expenses in subsequent years. For example, satellite Capital expenses It is estimated at about $ 220 million this year, but less than half of that in 2026, which should largely enhance the generation of free cash flow.
Cost reduction initiatives were impressive, but this is only one aspect of transformation efforts. In simple phrases, it does not matter how efficient the company if it cannot return to growth.
Siriusxm sees the ability to grow Free cash flow To about $ 1.5 billion annually in the short term, which will be about 50 % more than the current level. There are many different initiatives that can help them get there.
For one reason, the company has become more creative about the ways to sell subscriptions. Historically, Siriusxm will simply give the new car buyers a short experience, and I hope they will participate when its validity is over. This is definitely part of it, but Siriusxm is trying several other ways to grow subscribers to startup.
For example, the company recently launched a three -year subscription to selling agents as a new car option and sees strong attention so far.
Although the auto joint sector is the business axis, Siriusxm is making an effort to increase non -aquatic contributions, especially through packages. I recently announced a new package of Siriusxm All Access and Service Fox Nation in the application form only for only $ 11.99 per month.
The advertisement is another major opportunity that has started to gain some dangerous attraction. For example, Siriusxm recently launched a free version supported by ads from its service in some new vehicles. Although Pandora, owned by Siriusxm, mainly uses the advertising revenue form, Siriusxm only gets 2.5 % of its revenues from the ads. The advertisement inside the car is a large chance of Siriusxm at this stage, but it can grow to a $ 1 billion in revenue flow.
The advertisement is a great axis for Siriusxm at the present time, and if it can become a large revenue driver, it is likely to be a great victory for the shareholders. The company does a great job in investing in advertising technology, and recently participated with Ai Riseviv to allow brands to produce high -quality ads in an effective and cost -effective way.
As I mentioned, the market does not show much faith in the Siriusxm Plan. In fact, the shares are traded more than seven times in the front profits, despite the excellent profitability and the expected free cash flow growth in 2025. Not only that, but the company pays generous profits, with a return of about 5 % until this writing, which is well covered by the company’s profits. In addition, the company has started buying shares in late 2024 and continues to do so, which may also help pay the total returns.
To summarize it, while there are many risks of implementation, Siriusxm has a strong plan, and it makes all the right moves to benefit from its chances. I recently added stocks to my wallet and I think this will be an arrow in the market over the next five years.
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