1 Warren Buffett Stock Down 54% in 2024. Is It a Buy on the Dip?

Core Viewpoint - Sirius XM Holdings has experienced a significant decline in stock value, dropping 54% from the end of 2023 to November 19, 2024, despite Warren Buffett's substantial investment in the company [1]. Group 1: Company Performance - Sirius XM's quarterly revenue peaked in late 2021 and has been stagnant or declining since, with subscription revenue falling 5% year over year to $1.5 billion in Q3 [2]. - The company reported 33.2 million subscribers at the end of September, which is approximately 800,000 fewer than at the end of 2021 [2]. - Operating margin over the trailing 12-month period rose to 23.8%, indicating improved efficiency despite declining revenue [4]. Group 2: Competitive Landscape - The rise of mobile internet infrastructure and the popularity of audio streaming services like Spotify has negatively impacted Sirius XM, as Spotify's U.S. revenue grew 18.6% year over year to $1.6 billion, surpassing Sirius XM's total subscriber revenue [2]. - Sirius XM remains the only satellite radio provider, which gives it a unique market position, but it still relies heavily on subscriptions for revenue [3]. Group 3: Financial Metrics - Sirius XM's stock is currently trading at a low price-to-earnings ratio of 7.95 times trailing 12-month earnings, suggesting it may be undervalued [5]. - Free cash flow is projected to decline from $1.2 billion in 2023 to approximately $1 billion in the current year, raising concerns about the sustainability of its dividend [5][7]. - The company has increased its dividend payout by 22.9% since mid-2022, offering a yield of 4.3% at recent prices [4].