FUNDAMENTALS
Arguably, satellite radio will be a phased out technology in the coming years. What the blackberry has been to communication devices, satellite radio will soon find itself in the dustbin of consumer products. Ever wonder why the SEC had such little problem with the Sirius/XM merger in the first place? The marriage of these two companies was figuratively monopolistic in the sense that they are the only game in town when it comes to SATELLITE RADIO, but there are so many other products it has it contend with.... It has to withstand a withering barrage against other products and services, such as youtube with bluetooth smartphone technology, Pandora, and the like. Fewer and fewer vehicle manufacturers are offering that new Sirius/XM radio pre-installed as you roll off the lot. Moreover, more consumers will not go through the headache of buying, installing, and subscribing to the service when these items simply aren't already in the car. I'm also confident that many without a vehicle are simply disinterested in buying their portable devices. Simply put, it's worn off.
But.... what's propping up this company for so long? Enter the Howard Stern Show. Mr. Stern himself has been pulling further back and trying to market himself as a more family friendly person/elder statesman of radio. Case in point, the scaling back of 5 days of shows a week to 3 days a week, the elimination of his news department, and his involvement in the mainstream primetime show, "America's Got Talent.". Many hardcore Stern fans that have been with him since his peak in the 1990s have noticed a shift in his personality and show format that they find wholly unappealing, and has led to an online firestorm following an extended segment where he tried to adopt kittens out live on the air.
What's more is that Stern's contract is up this month. Even with a renewal of Mr. Stern's contract for a few more years, his dwindling involvement even as his potential employment continues will not signal any kind of surge in this stock's price. We see price approaching a resistance level around the $4.16 area, a place it has not traveled to since of October of 2013, but more on the technicals later. Point is, even a Stern re-sign isn't going to help the stock's price bust through this level.
I assert that the Stern Show is the only thing propping up this company. But as Mr. Stern makes awkward attempts to re-brand himself incongruent with his overall image, together with his dwindling involvement and resources devoted to his show, he continues to alienate even the most die-hard fans that support Sirius XM. The technology that competes with Sirius XM is becoming more lean and abundant and the show can only keep this company on life support for so long.....time to short. Long term, this stock WILL tank.
I invite anyone working for the Stern organization or Sirius/XM to contact me personally to help consult on how to right the ship here so their stock price's decline will not be as calamitous.
TECHNICALS
As previously mentioned, we are approaching a resistance level around the $4.16 level, a place that price action hasn't traveled to since October of 2013. Long term, this stock WILL tank, .For our swing trading friends, we see two opportunities associated with this resistance level. There is a Cypher pattern nearing completion there (red) and a bearish Gartley pattern starting to form in the vicinity. The fall of the price will not be without retracements, as evidenced by the bullish Cypher pattern that is out on the daily. The bearish advanced patterns mentioned here are a great way to get in on the short, but just be aware that this stock's price has been banging around a channel between $3.98 and $4.16.