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SiriusXM stock has fallen more than 60% over the past year, but Warren Buffett’s Berkshire Hathaway has continued snapping up shares at the discounted price. Other hedge funds are joining in as SiriusXM re-focuses on its auto-listening segment.
Quarterly revenue for SiriusXM rose sharply for several years before the COVID pandemic. But sales for the satellite radio outfit peaked in late 2021 and have remained stagnant or declining since. More and more audio listeners are turning to digital service providers (DSPs) like Spotify, YouTube Music, and Apple Music.
SiriusXM acquired Pandora in 2019 in an attempt to break into the streaming segment, but the company still relies on SiriusXM subscribers for 70% of its total revenue. Subscription revenue has not been reliable over the last five years and in Q3 2024, subscriber revenue fell 5% to 33.2 million. That’s around 800,000 fewer subscribers than reported at year-end 2021.
Streaming music over mobile plans has become much easier in the last five years, which means an in-car infotainment option is no longer as crucial to some households. For Spotify, the DSP reported Q3 2024 revenue that rose 18.6% year-over-year to $1.6 billion—which is more than the entire SiriusXM segment receives from its subscribers.
In a new disclosure to the SEC, Berkshire Hathaway confirmed that SiriusXM Holdings was among the shares it bought recently. Berkshire Hathaway purchased around five million shares of SiriusXM for $113 million, taking advantage of the price dip to load up on more shares. The stock has hit a new 52-week low at $20.58—its lowest point in more than a decade. Berkshire Hathaway now holds 117.5 million shares, roughly a 35% stake worth $2.4 billion.
“At current prices, we believe investors are overly pessimistic about SiriusXM’s future cash flows, and modestly added to our position,” Weitz Investment said in its Q3 2024 letter to investors. Hedge funds seem to believe SiriusXM will bounce back from this troubling low—perhaps as the company refocuses on the auto listening segment.
