Will Sirius XM’s Stock Rebound More Than 20% Post Coronavirus Peril?

Sirius XM‘s (NASDAQ: SIRI) stock is likely to outperform the broader S&P index post coronavirus and oil price war crisis, going by the trends seen during the 2008 slowdown. Sirius XM’s stock declined from about $6.40 on March 6th to $5 as of yesterday, March 24th, a 23% drop (vs. a 18% decline in the S&P 500 during the same period). The World Health organization (WHO) had declared a global health emergency at the end of January, in light of the coronavirus spread. SIRI stock has lost 30% from its $7 closing price on Friday, Jan 31st, to March 24th (vs. about 27% decline in the S&P 500).

Drawing lessons from the 2008 financial crisis, we see SIRI stock declined from levels of around $3 in October 2007 (the pre-crisis peak) to levels of around 15 cents in March 2009 (as the markets bottomed out). Implying SIRI stock lost as much as 95% from its approximate pre-crisis peak. This marked a much higher drop than the broader S&P, which fell by as much as 51%. However, SIRI recovered post the 2008 crisis, to levels of about 57 cents in early 2010, rising by 280% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same period.

Will Sirius XM’s stock recover similarly from the coronavirus spread?

We compare the performance of Sirius XM vis-à-vis the S&P 500 in our interactive dashboard analysis, 2007-08 vs. 2020 Crisis Comparison: How Did Sirius XM’s Stock Fare Compared With S&P 500?

Overall, there have been two distinct trends driving the recent sell-off. Firstly, the increasing number of coronavirus cases outside China is causing mounting concerns of a global economic slowdown. Secondly, crude oil prices plummeted by more than 20% after Saudi Arabia increased production.

COVID-19 outbreak negatively impacted the already declining auto sales as consumers are hardly making any big-ticket purchases under the current conditions. Moreover, satellite radio subscription could take a hit due to most of the users working from home instead of using the services while commuting to work.

If signs of coronavirus containment aren’t clear by the May Q1 earnings timeframe, it’s likely Sirius XM’s stock, along with the broader market, is going to see a continued drop when results confirm palpable reality.

What about timing?

Potential for SIRI stock to bounce from its March 24th $5 price, partially back to levels seen pre-Coronavirus crisis, would imply a 20% return, and its timing, hinge on the broader containment of the coronavirus spread – our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus.

Further, our dashboard -28% Coronavirus crash vs 4 Historic crashes builds a more complete macro picture, and complements our analyses of Coronavirus impact on a diverse set of Sirius XM’s peers. The complete set of coronavirus impact and timing analyses is available here.

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