Sirius XM Holdings (NASDAQ: SIRI), the operator of the country’s only satellite radio company, provided a disappointing update on its financial performance on Tuesday. It also named a new chief operating officer.
As a result, the stock was down 8.9% as of 10:20 a.m. ET.
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Sirius, which is fresh off its spinoff from Liberty Media, made several announcements in the update.
It said it was targeting $200 million in annualized savings by the end of 2025. It’s prioritizing retention and growth in the automotive business and sees streaming as a valuable companion service to its automotive offering.
Additionally, it aims to grow the advertising business and increase its business efficiency.
However, investors were disappointed with the company’s guidance for 2025 as it called for $8.5 billion in revenue, which was below the consensus at $8.74 billion and a decline from its guidance of $8.675 billion. It also expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.6 billion and free cash flow of $1.15 billion, which compared to prior guidance of $2.7 billion in adjusted EBITDA and $1 billion in free cash flow.
Separately, the company named Wayne Thorsen as its chief operating officer, effective Dec. 16. Thorsen was previously chief business officer at ADT, and will oversee Sirius XM’s product and technology functions, in addition to some commercial and other activities.
It’s understandable why the stock is falling if the company expects revenue and adjusted EBITDA to fall next year.
While Sirius XM does enjoy some advantages, including its monopoly on satellite radio and relationships with carmakers, the business has struggled to grow for years as its subscriber base has been flat.
Until that changes, the stock is best avoided.
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