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November 24, 2004
Has Sirius' stock reached it's ceiling?
There's no doubt that Sirius' stock has seen a massive jump in the past couple months. With Howard Stern's, followed by Mel Karmazin's, announcements of hopping on board, Sirius has seen more than an 80% gain. But now analysts are starting to take a step back, feeling that Sirius has nearly reached its ceiling - at least for now.
Many casual traders may look at SIRIUS Satellite Radio stock (SIRI) of over $6 and wonder why it doesn't have the potential of reaching XM Satellite Radio's stock (XMSR) of over $35. Fool.com answers this perfectly:
"The concept of shares outstanding isn't all that complicated, so it is alarming to see people buying a stock on the premise that the raw share price is lower than that of a different stock. Would these people be buying XM instead if it declared a 10-for-1 stock split? It's a haunting thought.It's slightly less troubling but still disturbing to see folks who understand that you need to multiply a stock's price by the shares outstanding to arrive at its current market value still ignore the fact that a young company like Sirius also has a ton -- and we're talking literally a couple hundred million -- of additional shares in options and other dilution that will be tacked on as the stock appreciates."
While there's no doubt that Sirius has an incredible future ahead of them, perhaps now is the time to take a step back, and look at the facts instead of the hype.
November 24, 2004 01:49 PM
