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Sirius XM (SIRI) Adds 900K Users in '20, Provides '21 Glimpse

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Sirius XM Holdings (SIRI - Free Report) added 909,000 self-pay subscribers in 2020 to reach a total self-pay user base of 30.9 million. The company had anticipated adding 800K self-pay net subscribers.

Sirius XM also expects to meet or exceed its 2020 guidance for revenues, adjusted EBITDA and free cash flow. Notably, revenues are expected to be approximately $7.85 billion, while adjusted EBITDA is expected to be $2.475 billion. Free cash flow is expected to be $1.6 billion.

Further, Sirius XM provided the initial 2021 guidance. The company expects to add more than 800,000 self-pay net subscribers. Total revenues are anticipated to be $8.35 billion while adjusted EBITDA to be $2.575 billion. Free cash flow is expected to be $1.6 billion.

Strong Content Lineup Aids Subscriber Growth

Markedly, Sirius XM shares lost 8.9% in the past year compared with the Zacks Broadcast Radio and Television industry’s rally of 30.5%.
 

 

The underperformance can be attributed to coronavirus-led disruption over advertising spending. Notably, in third-quarter 2020, advertisement revenues (17% of total revenues) declined 5.7% year over year to $345 million.

However, this Zacks Rank #4 (Sell) company is expected to benefit from subscriber base expansion owing to a strong content portfolio.

Moreover, Sirius XM’s recently announced extension of its broadcasting deal with radio personality Howard Stern is a key catalyst. Per the deal, Stern will continue to produce and host The Howard Stern Show exclusively for SiriusXM for the next five years.

The latest broadcast agreement is in line with SiriusXM’s strategy of collaborating with artists and organizations in order to expand its content portfolio. This is expected to help it compete better with music streaming providers including Spotify (SPOT - Free Report) , Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) .

Markedly, per a Statista report, the music steaming market is expected to have generated $19.7 billion in revenues in 2020. The figure is likely to hit $33.4 billion by 2025, witnessing a CAGR of 11.1%. Additionally, the user penetration rate in the market is likely to have hit 7.3% in 2020. The figure is expected to reach 11.6% by 2025.

The solid growth rate bodes well for Sirius XM based on its partnerships with the likes the Masters Tournament and The National Football League. Moreover, the launch of the SportsGrid Radio Channel on SiriusXM radios and the Sirius XM app on Channel 204 are expected to aid subscriber growth.

Additionally, Sirius XM’s expanding partner base of automakers including General Motors, BMW and Toyota Motors is driving the adoption of its audio entertainment services. On Dec 9 Sirius XM and Maserati announced that the later has made SiriusXM with 360L, a standard feature across its entire model year 2021 vehicle lineup in the United States.

Sirius XM has also inked extended connected vehicle agreements with Nissan and Infiniti till 2022. Additionally, the company extended agreements with OEMs like Audi, Mazda, Land Rover, Mercedes-Benz, Jaguar and Volvo.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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