High valuation and lower projections raise concerns for Berkshire and hedge funds

  • Sirius XM stock is expensive compared to the cable industry
  • Financial projections show lower revenue and earnings for Sirius XM in 2024
  • Sirius XM is valued at 10 times projected 2024 Ebitda, while cable companies trade at 7 times
  • Negative news or overvaluation concerns could impact the stock price
  • An avalanche of Sirius XM stock is expected to hit the market
  • Investors in the tracker are betting on a lofty valuation despite a no-growth revenue outlook

The newly released proxy for the proposed merger of the Liberty SiriusXM tracking stock with Sirius XM Holdings highlights the high valuation of the satellite radio company relative to the cable industry—a risk for investors who have bought the tracker in hopes of gains when the merger closes. Financial projections in the proxy show that Sirius XM Holdings is expected to post lower revenue and earnings in 2024, which has led to a decrease in the stock price. Sirius XM is valued at about 10 times projected 2024 Ebitda, while cable companies trade at about seven times. Negative news or views of overvaluation could impact the stock price when the deal closes, potentially affecting holders of the tracking stock. An avalanche of Sirius XM stock is expected to hit the market, as Liberty Media holds about 83% of the company and will convert it into newly issued stock. Investors in the tracker are betting on a lofty valuation despite a no-growth revenue outlook. The company also faces challenges with its subscriber base and competition from free music streaming services.

Public Companies: Sirius XM Holdings (SIRI), Liberty SiriusXM (LSXMA), Comcast (CMCSA), Charter Communications (CHTR)
Private Companies:
Key People: Warren Buffett (CEO of Berkshire Hathaway), Steve Cohen (Founder of Point72 Asset Management), Seth Klarman (CEO of The Baupost Group), Jason Bazinet (Analyst at Citigroup), Ted Weschler (Manager at Berkshire Hathaway)

Track all markets on TradingView

Factuality Level: 7
Justification: The article provides information about the high valuation of Sirius XM relative to the cable industry and the potential risks for investors. It includes financial projections from the proxy and analyst opinions. However, it does not provide a balanced perspective and focuses more on the negative aspects of the company’s outlook.

Noise Level: 3
Justification: The article provides relevant information about the high valuation of Sirius XM relative to the cable industry and the potential risks for investors. It includes financial projections and analysis from Citigroup analyst Jason Bazinet. However, the article contains some repetitive information and filler content, such as mentioning Warren Buffett’s preference for Siriusly Sinatra channel and unrelated details about Berkshire Hathaway.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the valuation of Sirius XM Holdings and its impact on investors who have bought the Liberty SiriusXM tracking stock. It mentions notable investors such as Berkshire Hathaway, Point72, and Baupost Group.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article focuses on the financial aspects of the proposed merger and the potential impact on investors. There is no mention of any extreme events or their impact.

Reported publicly: www.marketwatch.com