The upside/downside of Sirius XM


Sirius XMMotley Fool has gazed into its crystal ball with an eye toward determining whether the stock of satellite audio service Sirius XM is headed up or down. Either way, its fate seems tied to the automobile.

MF noted that the company has already established an impressive track record after coming back from a near-death experience, and has elevated its pricing back to pre-recession levels. But it wonders if it is capable of generating another round of explosive growth.

Analysts are expecting the company to announce earnings of three cents per share during its upcoming Q1 results release, but according to MF have lowered full year estimates to just a penny a share.

The good news is the success currently being enjoyed by the automobile industry. New cars mean new potential subscribers to Sirius XM. The increase in car sales is fuel to optimistic projections for the company.

However, new internet audio services, prominently including but not limited to Pandora and Spotify, are also eying those new cars on the road, and are expected to begin eating away at Sirius XM’s subscriber base.

MF notes the company’s own cautious prediction that it would gain 1.4M new subscribers in 2013 after inking 2M in 2012.

So there you have it. New car sales could fuel a year of solid growth, but if new competitors start ousting the satcaster from cars, it could go the other way.