As Sirius XM continued to increase subscribers the share price had risen sharply, peaking at $4.18 in October of 2013. After the Q3 earnings were released on October 24th, along with a downward revision self-pay net add guidance, the share price began to fall.
The downward revision to guidance proved accurate as the full year subscriber growth at Sirius XM slowed down in 2013 and that growth is expected to continue slowing down in 2014. This is not just the rate of subscriber growth that is slowing down, but also the actual number of net adds that is expected to decline for the second consecutive year.
As Meyer pointed out, the company is moving into a market segment that has lower income and is expected to convert to self-pay at lower rates and cancel at higher rates. Investors would be well advised to closely follow churn, conversion rates and subscriber growth, and determine whether or not their growth expectations for the company are reasonable.
Breaking News: Sirius XM exploratory committee recommends that Sirius make counter offer of $3.20 to Liiberty Media