Sirius XM Radio (SIRI) Last Update 7/9/21
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Sirius XM Radio
Trefis Price
Top Drivers for Period
Key Drivers
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Potential upside & downside to trefis price

Sirius XM Radio Company


  1. Advertising constitutes 55% of the Trefis price estimate for Sirius XM Radio's stock.
  2. Satellite Radio Subscriptions constitute 34% of the Trefis price estimate for Sirius XM Radio's stock.
  3. Equipment, Royalties and Other Revenues constitute 11% of the Trefis price estimate for Sirius XM Radio's stock.


  1. SiriusXM 2020 Snapshot

Sirius XM managed to grow its business for the most part in a challenging year, and that's important given the headwinds early last year facing the auto industry in general, but the satellite radio provider in particular. The company grew its self-pay subscriber count by 909,000 to 30.9 million in 2020, with its revenue rising 3% year-over-year (y-o-y) to $8.04 billion. Declining ad revenue at Pandora as well as Sirius XM's flagship satellite radio platform was more than offset by small upticks in premium users and average revenue per user. In addition, its net income (excluding non-cash impairment charges) rose to $0.25 a share from $0.20 a share in 2019. Adjusted EBITDA rose 6% to hit a record $2.58 billion. To add to this, a monthly churn of 1.7% for all of 2020 represents the fourth consecutive year of improvement on that front.

  1. SiriusXM 2021 Guidance

Sirius XM's initial read of the year ahead is a mixed bag. It expects to close out 2021 with 800,000 more self-pay subscribers than it has right now. It sees revenue growth accelerating to 4% with its $8.35 billion forecast. However, its guidance calls for an adjusted EBITDA of $2.575 billion, which is exactly where it landed in 2020. The approximately $1.6 billion in free cash flow that it's modeling for 2021 could be just shy of the $1.66 billion it delivered on that front in 2020.

  1. Pandora Acquisition

Sirius XM completed the acquisition of Pandora for $3.5 billion in an all-stock deal in early 2019. The deal made the combined entity the world's largest audio entertainment company. Further, it would give the satellite radio company entry into the well-established media streaming market. The merger should unlock music streaming services for cars. This deal holds great potential for both companies as it could bolster their positions in segments where they are currently lacking. Pandora's technological competence should help Sirius XM expand beyond vehicles and streamline its features like personalized recommendations. Concurrently, Sirius XM alliance with several automakers should accelerate Pandora's distribution to vehicles and unlock music streaming services for automobiles.


Below are key drivers of Sirius XM's value that present opportunities for upside or downside to the current Trefis price estimate:

  • Number of Sirius XM Subscribers: We currently forecast this figure to increase from 35.8 million in 2019 to about 40 million by the end of the Trefis forecast period. If subscriber additions accelerate and Sirius XM reaches a subscriber base of about 61 million by the end of the Trefis forecast period, there could be an upside of about 18% to the Trefis price estimate. This could happen if the company can further increase its penetration and success rate in new as well as used cars - aided by the Pandora deal. On the other hand, if competition from Spotify and other radio/online audio streaming services increases and the subscriber additions slow down amounting to current levels by the end of the Trefis forecast period, there could be a little over 15% downside to the Trefis price estimate.
  • Sirius XM's Average Revenue Per Subscriber: We currently forecast this figure to increase from $171 in 2019 to about $182 by the end of the Trefis forecast period. If more subscribers upgrade to a higher priced tier and as a result, the average revenue per subscriber reaches more than $200 by the end of the Trefis forecast period, there could be an upside of about 13% to the Trefis price estimate.


Sirius and XM merged in July 2008 to form Sirius XM Radio. The satellite radio service provider offers numerous channels comprising of commercial free music, sports, talk shows, news stations, and other channels in the U.S. Sirius XM radio channels are mainly available through receivers in automobiles but can also be accessed over the internet or through home stereos by using various accessories.

The firm's satellite radios are primarily distributed through automakers ("OEMs"), retail locations, and through their website. Sirius XM has ties with major automobile manufacturers such as Ford, GM, and Toyota. This helps drive its presence in the US automobile space. Additionally, satellite radio services are also offered to customers of certain rental car companies.

The firm's primary source of revenue is the subscription fee it charges customers for annual, semiannual, quarterly, or monthly subscriptions. Additionally, the company derives revenue from activation fees, the sale of advertising on select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services such as weather, traffic, data, and backseat TV services.

Sirius XM completed the acquisition of Pandora in February 2019, making it the world's largest audio entertainment company. Additionally, the acquisition should give the satellite radio company a greater presence in the streaming market and should accelerate Pandora's distribution to vehicles and unlock music streaming services for automobiles - given Sirius XM's alliance with several automakers.


Subscription fee

Sirius XM earns the majority of its revenues from the subscription fee it charges its subscribers. It offers various monthly, semi-annual, and annual plans to customers. The company also offers discounts on long-term subscriptions and on multiple subscriptions. As of now, the Sirius XM All Access package is available for $20.99 per month and the other basic packages are available at $15.99 and $10.99 per month.

Sirius XM in Cars

Sirius XM has contracts with nearly all major automobile manufacturers. Every year the firm pays out a large amount to its OEM (original equipment manufacturers) partners to keep their radios flowing into the new car market, at around a 75% penetration rate. Of this 75% who buy a car with satellite radio, 39%-40% choose to keep it after the promotion trial runs out.

  • General Motors:

    Sirius XM has a deal with GM which allows it to install their satellite radios in GM vehicles. This deal was valid till September 2020. Thanks to a new contract extension that will run through 2027, GM will increase vehicles equipped with Sirius XM to nearly all Chevrolet, Buick, GMC, and Cadillac vehicles beginning with the model year 2021. In addition, the company also announced a significant expansion of its 360L platform at General Motors, this should further drive penetration.
  • Nissan and Infiniti:

    Sirius XM's deal with Nissan and Infiniti should further boost its connected vehicle business. This would allow it to install their next generation platform to all Nissan and Infiniti vehicles and should enhance the new car penetration rate. This deal is valid until 2022.
  • Toyota:

    Sirius XM has a deal with Toyota which allows it to install their satellite radios on all Toyota vehicles in the United States. This should help drive new car penetration this fall in model year 2020 vehicles. Further, this deal is valid until 2028.
  • Sirius XM is also partner for companies like Volvo, Mercedes-Benz, Honda, Ferrari, Kia, Bentley, BMW, Volkswagen, Hyundai, and Mitsubishi.
  • Many trucks, boats, and recreational vehicles include Sirius XM radios as a standard fit.


Used car market becoming important for Sirius XM

Sirius XM mentioned at the end of 2017 that its penetration rate in the used car domain is around 35%, which increased to 40% by the end of 2018. The used car market is becoming attractive for Sirius XM and penetration could grow from current levels. This would present a strong opportunity for Sirius XM to exploit in the used car market. CFO David Frear expects used car trials to surpass new car trials in the foreseeable future and double in the next decade. These numbers suggest that the company is extremely confident about potential growth in the used car market.

Increasing competition

On-demand music streaming services are currently dominating the market, with Spotify being one of the leading players. Spotify had about 207 million Monthly Active Users (2018) globally, far ahead of its nearest rival Apple Music and continues to add more subscribers - driven by expansion into new markets. Further, connected cars that allow smartphone apps to stream seamlessly through Bluetooth should dampen the subscriber growth in premium-priced satellite-beamed platforms. However, Sirius XM has seen steady growth in recent times. This coupled with the acquisition of Pandora should allow Sirius to counter this competition.

Ability to afford unique content

Sirius XM's business model is based on a subscription fee, and therefore the company is able to afford unique and exclusive content that separates it from other radio services. The company will continue to sustain this ability and therefore, grow its user base. An example of this front is its recently renewed contract with Howard Stern, that would probably keep him associated with Sirius XM through to his retirement.

Connected services

In addition to offering listening content through satellite radio sets factory-installed in cars, Sirius XM offers connected services to car manufactures through its subsidiary – Sirius XM Connected Vehicle Services Inc. The company provides an array of features to enhance safety, security, and convenience. These include remote and assist services, automatic crash notifications, easy access to maps, weather, restaurants and points of interests, scheduling service appointments, repairs etc. The satellite radio company has been in this domain for a while and it recently signed a deal with American Honda to provide next-gen connected services to Acura and Honda vehicles. Currently, Sirius XM provides connected services to Acura, BMW, Hyundai, Honda, Infiniti, Jaguar, Land Rover, Lexus, Nissan, Subaru, and Toyota. With new car sales increasing steadily, connected services should provide buyers an incentive to subscribe to Sirius XM services, which should keep its growth running. Coupled with the huge opportunity in the used car domain, this paints a pleasing picture for Sirius XM’s future.