Sirius XM (SIRI) – A Value Play Poised for a Turnaround
Sirius XM (NASDAQ: SIRI) may not look like a growth stock on the surface—it’s had three straight years of declining revenue, two earnings misses to kick off 2025, and the stock is down 32% over the past year. But we think this could be exactly the kind of overlooked name where patient investors might find significant upside.
The second quarter wasn’t pretty. Net income fell to $205 million, well below last year’s $354 million. EPS came in at $0.57, missing expectations of $0.77. But that headline miss masks some important positives. Free cash flow rose 27% year-over-year to $402 million, and the company reaffirmed its full-year guidance across all key metrics. Churn also held steady at 1.5%, near historic lows, and while the company lost 68,000 net self-pay subscribers during the quarter, that was a meaningful improvement from previous trends.
At today’s levels, Sirius XM trades at just 7.7x forward earnings and yields 5.1%—a combination rarely seen in a stock that still generates strong cash and has a sticky subscriber base. The company has returned capital aggressively, reducing its share count by nearly half over the past 12 years through buybacks. Critics argue buybacks haven’t been effective since the stock has continued to slide, but that pressure may be easing.
There’s also one major shareholder worth noting: Berkshire Hathaway now owns a 35.5% stake in the company. While Warren Buffett isn’t typically known for chasing growth stories, his firm accumulating that large of a position signals confidence that Sirius XM is undervalued.
Meanwhile, Sirius XM is making strategic shifts in its content, leaning more into podcasts and youth-focused voices like Alex Cooper and Trevor Noah—while legacy headliner Howard Stern is likely to retire by year-end. Podcast revenue jumped 50% year-over-year last quarter, a small but encouraging sign that its platform refresh is gaining traction with younger listeners.
Several macro factors could also help: return-to-office trends are putting more people back in their cars, vehicle replacement demand is rising as the average U.S. car approaches 14 years old, and falling interest rates may fuel an uptick in new car sales—critical for Sirius XM’s trial funnel.
It’s not without risks, but Sirius XM looks like a classic case of a cash-generating business that’s been thrown out with the bathwater.
