Sirius stock has rallied since hitting a low of 5 cents on February 11, 2009 but one has to wonder if this rally is sustainable. Investors of Sirius would call this a future oriented stock, but is it really? Let me explain ten years ago, satellite radio could clearly be seen as the future. This was because it had better sound quality than terrestrial radio, it had no commercials, it featured paid programming with no censoring, and it could be listened to everywhere. This meant when one went on a drive to another city they could listen to their favorite programming.
Fast forward ten years, and all of these features no longer appear futuristic. Music players such as Iphones connect to almost all new cars which allow users to play virtually anything they want. Why would someone pay for a a feature like satellite radio if one can get it for free, or for less money? Investors of Sirius would argue that the size of data plans limit this feature, but a counter to that argument would be isn't an increase in the size of a data plan the future then? There are many new phones that can connect to a car, that a user could run any radio station/show or podcast off of it in the world. Satellite radio looks more and more like a device for baby boomers who can't stand the terrible coverage of their local city terrestrial radio but also does not know how to work an MP3 player. Satellite radio is no longer a bet against terrestrial radio, it is a newer form of terrestrial radio. Iphone killed the satellite radio star.
To see the full Sirius report click here.
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