Sirius XM SIRI shares have plunged 42.3% over the past year, underperforming the Zacks Consumer Discretionary sector’s appreciation of 11.6% and the Zacks Broadcast Radio and Television industry’s return of 52.7%.

SIRI shares’ underperformance can be attributed to its decline in subscriber revenues and earnings, a downwardly revised revenue guidance for 2025, slow subscriber growth and tough competition in the music streaming market from the likes of Apple AAPL and Spotify SPOT. Apple’s acquisition of Shazam and Asaii strengthened its presence in the music streaming space, while Spotify partnered with Samsung and Google to grow its subscriber base and maintain its dominant position in the market.

Sirius XM is countering all headwinds by expanding its content and targeting niche audiences. It is doing an exclusive coverage of the 2025 NTT IndyCar Series, which started with its season-opening Firestone Grand Prix of St. Petersburg presented by RP Funding on March 2. It will provide live broadcasts of all 18 events on the IndyCar calendar, including the Indianapolis 500.

Beyond live on-track coverage, SIRI is also providing its subscribers with weekly IndyCar- focused shows and podcasts that offer the latest news and insights from racing experts. This is likely to aid the company’s subscription revenues as it will be attracting more subscribers, especially motorsports fans, to its platform.

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Meyer Shank Racing and Sirius XM are extending their sponsorship collaboration this season, featuring Sirius XM branding on multiple race cars. Sirius XM will be the primary sponsor for Rosenqvist’s No. 60 Honda, the co-title sponsor for Marcus Armstrong’s No. 66 Honda, and will also appear on Helio Castroneves’ No. 06 Honda for the Indianapolis 500.

The Zacks Consensus Estimate for SIRI’s first-quarter 2025 earnings is currently pegged at 69 cents per share, indicating an improvement of 9.5% over the past 30 days. The estimate indicates a year-over-year decline of 1.43%. 

The consensus mark for revenues is pegged at $2.09 billion, indicating a year-over-year decline of 3.46%.

SIRI beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, missing once and matching once, with the average negative surprise being 41.41%.

What Should Investors Do With SIRI Stock?

Despite facing near-term challenges and intense competition, there is some confidence in the company’s long-term prospects due to its strategic investments in streaming and content expansion. The company’s partnerships with automakers like Tesla TSLA focus on premium and exclusive content and improvements in customer engagement strategies, positioning it for sustained growth over time. However, near-term challenges persist. Declining subscription revenues and earnings, slow subscriber growth due to challenges in its conversion rates, and softness in the broadcast market pose risks to immediate financial performance. Moreover, its higher subscription costs are expected to keep margins under pressure.

SIRI currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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