I received a very lucrative offer in the mail the other day. The offer was from Sirius XM Holdings (SIRI). Go ahead and click on the image to look at the offer. As the title mentions, they must be making a Sirius push for subscribers!

The offer was $99 for a 3 year subscription period. The $99 offer is for SiriusXM Select service. I am not sure if that package comes with Howard Stern or not. They are even waiving the reactivation fee of $15.

While I put less than 9,000 miles on my vehicle annually, I am still tempted to sign up for the offer. But only if the offer allows me to stream Sirius on my laptop as well and not just listen to it in the vehicle. If streaming is allowed in the SiriusXM Select package, then SIRI may have just added 1 more subscriber. I will be looking into the details this week and post my investigations in the comments below.

This offer sheet got me thinking – why is there such a push to increase subscribers at such a low cost? What is Sirius XM Holdings hiding behind curtain number 3?

While I might not be able to answer those questions, they did get me thinking. What is brewing over at Sirius XM Holdings? As the fleet of cars with inactive radios grows, so does their potential to re-acquire those customers and gain additional revenue. It costs SIRI no extra money to add new subscribers with inactive radios. So the incremental revenue that is generated typically goes directly to the bottom line and boost profits.

There is a negative to signing up users at less than normal fees. Your average revenue per user “ARPU” goes down. You can be sure that some analyst will point out the decrease in ARPU in the next conference call.

Well, enough about the speculation from the offer I received. Let’s jump to the charts. I’m anxious to see what the charts suggest now that my $7.53 price target has been met ahead of schedule.

5 Year Weekly Candlestick Chart

This first chart is a 5 year weekly candlestick chart with 3 different Fibonacci Extension Tools overlaid on it. I’ve posted this chart before but want to provide an update on the status and comment on the next price targets that the tools indicate.

One of the first things that I notice is the confluence of 3 Target Lines at the $[s2If !current_user_can(access_s2member_level1)]…….

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I calculate the next set of price targets price target now that my $7.53 price target has been met ahead of schedule.

If you are not a Trendy Stock Charts member, consider joining today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)]7.77 price area. There is the 100% Target Line from the black Fibonacci Extension Tool which sits at the $7.77 price level. Then there is the blue 100% Target Line at $7.53 (the price target we were previously monitoring). And last there is the 423.6% Target Line from the green tool that sits at $4.81.

Price Targets

As you can see there are still 2 higher price targets from the confluence area of Target Lines from the 3 different tools. The unmet Target Lines sit at the $7.77 and $7.81 price levels. At that point I wonder if SIRI has an “overshoot” of its target and falls just shy of $8….those would be the immediate price targets to focus on.

Shorter-term though, the sharp increase in buying momentum last week on the MACD Histogram is a little concerning. I know, it is increasing buying momentum, so why am I concerned? Gradual increases in buying momentum are preferred and more sustainable. Spikes in the MACD Histogram can lead to temporary tops or bottoms. And since SIRI did hit 1 of the 3 Target Lines from the confluence area, the chance for a pullback next week increased a smidge.

Longer-term though it is becoming more probable from an Elliott wave perspective that the $8.43 price level very reachable. Not only that, I am becoming more confident that the 161.8% Target Line from the black Fibonacci Extension Tool is going to be reached. That Target Line sits at the $9.38 price level, a price target that is estimated to be approximately 1 year out based on SIRI’s acceleration. This is the longer-term 161.8% Target Line which is the Golden Ratio for the current uptrend. The Golden Ratio is a high probability target area for up trending stocks. The tricky part is calculating it. We just did.

Pullback Areas

If the MACD Histogram starts to shows slowing buying momentum, the first pullback area that comes to mind for SIRI is the $7.50 price level. That is for a pullback that starts in a couple weeks. However, if the pullback for SIRI’s share price starts this week because of the spike in the MACD Histogram, the $7 price level is the probable pullback area.

Monitor the MACD Histogram on SIRI’s weekly chart early in the week. If the buying momentum does start to slow, focus on the $7.77 or $7.81 price levels to trim shares. The first signs of slowing buying momentum on the weekly chart when SIRI is at or above $7.77 is the probable sell signal short-term.

If SIRI does enter into a consolidation period at any point, stop by the Idea Chamber and ask me to analyze it.

Bearish Scenario

As I sat here typing and thinking about the summary, I thought of a potential bearish reason why there was a Sirius push for subscribers – maybe SIRI was experiencing a higher than normal turnover of customers that were not renewing. While I have not looked at their financial statements lately to see how accurate that thought of mine is, I do remember that as a criticism a couple years back.

Sirius Push For Subscribers Summary

So why is there a Sirius push for subscribers at Sirius XM Holdings (SIRI)? We may have to wait until their next earnings report to find out. That date is tentatively set for July 26, 2018. In typical SIRI fashion, they report before the market opens. Our question about the push for subscribers should be answered then. Is SIRI adding fuel to their fire with incremental revenue as I suggested? Or are they doing damage control because of a sudden loss of subscribers?

A Metallica song comes to mind for me…..”give me fuel, give me fire, give me that which I desire….”.

And my last thought in summary is don’t try to be tricky and trade your way out of higher profits that appear to be coming. Always keep a core position in case pullbacks don’t materialize as planned. The Apple trade comes to mind for me. I kept eating for a pullback from the $150 area to $135 only to find out months later why it didn’t happen – Warren Buffet was busy buying all the shares on pullbacks and bought a boatload of Apple shares.

With SIRI trending upwards nicely now, make certain to keep the core position. As the fine print on a passenger side mirror states “objects in the mirror are closer than they appear”….that is how I feel about the $8.43 price target for SIRI.

Don’t make the same mistake I did with Apple and cash out your core shares along with your trading shares when higher price targets lie ahead. (And while taking profits is never a mistake, I did cut the shares loose too early…)

I will try to post a chart mid-week for SIRI. If I forget, drop me a reminder in the Idea Chamber. Thanks and as always good luck trading!

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