To The Moon

Warren Buffett's Berkshire Hathaway just bought an additional $54 Million worth of $Sirius XM(SIRI)$

Warren Buffett’s Berkshire Hathaway has recently increased its stake in $Sirius XM(SIRI)$ by purchasing an additional 2.3 million shares for approximately $54 million. This series of transactions, which took place from January 30 to February 3, 2025, has raised Berkshire’s ownership in SiriusXM to over 35%, with a total investment value of around $2.9 billion.

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Reasons for the Investment

1. Long-term Growth Potential: Despite SiriusXM’s recent struggles, including a 58% decline in its share price in 2024, Buffett likely sees long-term potential in the company’s ability to expand its digital platform and podcast offerings.

2. Free Cash Flow: SiriusXM has consistently generated free cash flow, which has allowed the company to pay dividends and repurchase shares. This financial flexibility is likely appealing to Buffett.

3. Content Strategy: The company has been investing in exclusive content, including podcasts and radio shows, which could drive future growth.

Company Performance

• Financial Metrics: SiriusXM reported a trailing P/E ratio of 7.28 and a forward P/E ratio of 8.42 as of February 5, 2025. The company’s free cash flow has remained relatively stable despite recent losses.

• Revenue Outlook: For 2025, SiriusXM expects total revenue of $8.5 billion, adjusted EBITDA of $2.6 billion, and free cash flow of $1.15 billion. This outlook, while below analyst estimates, still indicates potential for improvement.

• Subscriber Growth: The company added 14,000 self-pay subscribers in Q3 2024, showing signs of stabilization.

Market Reaction

SiriusXM’s shares have surged approximately 5% in 2025 following Buffett’s latest investment. However, the stock remains under pressure due to ongoing challenges, including subscriber losses and competition from streaming services.

Buffett’s continued investment in SiriusXM suggests confidence in the company’s ability to turn around its performance through strategic initiatives and cost optimization.

As of February 9, 2025, the options market for $Sirius XM(SIRI)$ shows significant trading activity and sentiment indicators that traders should consider:

Option Chain Overview

• Expiration Dates: The most active expiration dates for SIRI options include February 14, 2025, February 21, 2025, and March 21, 2025.

• Volume and Open Interest: For the February 14, 2025, expiration date, there are a total of 1,476 contracts, with 535 call options and 941 put options. This indicates a higher volume of put options, suggesting a bearish sentiment.

Put/Call Ratio

• The Put/Call Ratio (PCR) for SIRI options is 1.76, indicating that traders are more inclined towards put options, which suggests a bearish outlook.

Most Active Options

• Call Options: The most active call option strike price is $26.50, with a volume of 126 contracts.

• Put Options: The most active put option strike price is $24.00, with a volume of 638 contracts.

Market Sentiment

• The higher volume of put options compared to call options indicates that traders are currently more concerned about potential downside risk in SIRI's stock price.

• However, the presence of significant call option activity, particularly around the $26.50 strike price, suggests that some traders are betting on a potential rebound or stabilization in the stock price.

Recent Trading Activity

• On February 6, 2025, there was unusually high options trading activity in SIRI, with traders purchasing 64,012 call options. This suggests that some market participants are expecting a potential upside move in the stock.

Analysis and Strategy

• Bearish Strategy: Traders who are bearish on SIRI might consider selling call options or buying put options, especially around the $24.00 strike price, which has the highest put volume.

• Bullish Strategy: For those who believe in a potential recovery, buying call options at the $26.50 strike price could be an attractive strategy, given the recent high volume of call options traded.

Overall, the options market for SIRI reflects a mixed sentiment with a slight tilt towards bearishness, but significant call option activity suggests that some traders are betting on a potential rebound.