Sirius XM and The Battle Of Two Worlds

By Relmor Demitrius

Sirius XM Radio (NASDAQ:SIRI) starts off the week on a high note.  Having once again broken the $1 mark and maintained it for three consecutive days now, leaving only 7 days remaining to comply with the 10 needed for NASDAQ’s minimum bid price rule requirement.  Sirius XM had been issued a letter of non compliance, and a Staff Notification of Delisting a month ago now.  They have a panel hearing on April 29th to request additional time to come into compliance.  If that panel hearing ends up being necessary, ironically it would come on day 11 of being over $1, on this attempt to hold over $1 it is currently in.  Coincidence or not, it would negate the need to ask for more time from an independent panel of business leaders and industry professionals.  If this were to occur, Sirius XM might have one of the best days of the year coming on that day 11.

Any institutions waiting to buy in for the dollar threshold would most likely be given the green light at that point.  Institutions that aren’t fortunate enough to be able to buy a stock under $2 or under $5 are going to be drooling over the lost opportunity on this one.  Of course institutions who can might decide there is no better time to attempt one last low price purchase of this equity.  If $1 is the new “low” and low point in anyone’s risk tolerance, traders might also pile in and use $1 as their benchmark price.  If this stock then gains the momentum of swing traders, and we see shorts closing their positions who bet against the odds on this company, there could be another capitalization day similar to what occurred when this stock broke over .79 this year.  It has never traded lower than that price since, hence to this date, under .80 on this equity might have been permanently capitalized.

There are definitely signs to look for and caution of course is still necessary with any stock trading this low, but signs of the “under $1 world” are slowly fading.  The stock was a perfect trading vehicle.  The trader world would love for this equity to never clear $1, and always be able to have sentiment shift on a stock under $1.  This makes for easy trades, tons of volume, and massive volatility.  A trader’s dream.  Unfortunately for this culture, the short culture and the trader culture in this stock, the company keeps improving so dramatically, every day it stayed under $1 was another day more and more institutions and private investors were wondering why this stock is still so low, wanting to buy it and moving the stock up on demand.

There is still the pending word on what Liberty Media is doing that required a request for early termination from the FTC.  Liberty Media (NASDAQ:LINTA) has filed some type of transaction request in regards to Sirius XM Radio.  Liberty Capital (NASDAQ:LCAPA) is the tracking stock that houses Liberty’s 40% stake in the company through its Liberty Radio holding.  There is a strong chance we may hear something this week on this issue as well.

The battle of two worlds.  Under $1 and over $1.  Trading stock or legitimate investment?  Listing concerns versus trading and acting like a real stock from a strong company it represents.  Who will ultimately win this fight?  Stay tuned, the final rounds are coming.

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Long SIRI