Are There Any Legitimate Threats to Sirius XM Radio’s Rise?

Sirius radio

Investors who have doubted Sirius XM Radio (NASDAQ:SIRI) in recent years have missed out on the company’s huge gains. Capping off a year in which stock prices rose over 80 percent, May ended with Sirius up 7 percent since the first of the month. Prices cooled off for the week, but most analysts see a bright future ahead for a company that has no major competition at the moment. Are any real threats to Sirius’s reign on the horizon?

Surveying the week’s trading activity, it appears plenty of bullish sentiment exists for Sirius in the long term. Schaefer’s reported that more than 2,600 January 5-strike call options sold on Wednesday, signifying a very optimistic take on the potential of Sirius. By that date, LEAPS have to crack the $5.28 mark when taking the $0.28 VWAP into account. These investors believe Sirius has the juice for another 50 percent increase in the next eighteen months.

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As financials are strong and cash holdings substantial, Sirius is in good shape. There are few reasons to be considered about the slight slide for the week. However, thinking about the long term, the company will have to maintain its position as the go-to option for music, talk radio, and other types of audio entertainment as new entries continuously come into the picture. Former CEO Mel Karmazin once remarked that cash-laden companies like Google (NASDAQ:GOOG) could conceivably step in and start chipping away at the satellite radio market by offering free material. Yet lower-priced competition already exists.