After Its Reverse Stock Split, Is SiriusXM Satellite Radio a Buy?

Core Viewpoint - SiriusXM Holdings has faced challenges in maintaining its market position against competitors like Spotify, but recent corporate actions, including a reverse stock split and a spin-off, may provide a fresh start for the company [1][2]. Group 1: Corporate Actions - Liberty Media completed the spin-off of Liberty SiriusXM Holdings, reducing the number of shares outstanding by approximately 12% [2]. - Following the spin-off, SiriusXM enacted a 1-for-10 reverse stock split, which lifted its share price out of the penny-stock range [2]. - The company declared a quarterly dividend of $0.27, resulting in a yield of 4.6%, and announced a $1.166 billion share repurchase program [3][2]. Group 2: Financial Performance - SiriusXM reiterated its full-year revenue forecast of $8.75 billion and adjusted EBITDA of $2.7 billion, while trimming its free cash flow guidance from $1.2 billion to $1 billion due to spin-off-related charges [2]. - The company ended the second quarter with $9 billion in long-term debt, aligning with its target leverage ratio based on the EBITDA forecast [5]. - In the third quarter, SiriusXM's revenue fell 3% to $2.18 billion, and total subscribers decreased by 100,000 sequentially to 33.3 million, down 806,000 from the previous year [6]. Group 3: Market Position and Challenges - SiriusXM has struggled to grow its revenues and audience, facing competition from internet-native platforms and a decline in market share [5][6]. - The potential loss of high-profile talent, such as Howard Stern, when his contract expires next year, poses a risk to the company's subscriber base [6]. - The company is evaluating goodwill and intangible assets inherited from Liberty Media, which may lead to a non-cash write-down in the third quarter [5].