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This Week in Sirius XM Radio Inc (SIRI)

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Things never get dull for the country’s lone satellite-radio provider. Shares of Sirius XM Radio Inc (NASDAQ:SIRI) moved higher this week, closing 1% up to hit $3.15. On Wednesday, the shares even traded as high as $3.23, just a pair of pennies from revisiting their four-year high.

There was more going on beyond the share-price gyrations. Nasdaq issued its bimonthly short interest metrics, and Sirius checked in with a 52-week high in the number of shares sold short. As its Web-based personalized radio works its way through beta, that market is heating up as two long-established players are taking shots at Pandora Media Inc (NYSE:P) . And speaking of Pandora, its CEO spoke at a conference and had some interesting thoughts on Sirius XM.

Sirius XM Radio Inc (NASDAQ:SIRI)Let’s take a closer look.

Short people
There were an amazing 401.6 million shares of Sirius XM sold short as of the end of January. The number of bearish bets on the satellite-radio star never got this high last year. Why are the naysayers coming out of the woodwork? There are a few possible reasons.

  • Sirius XM was set to report its fourth-quarter report early in the month, and skeptics may have figured that the good news was already out after Sirius XM revealed its healthy net subscriber additions for 2012 and initiated its outlook for 2013 in January.
  • Liberty Media Corp (NASDAQ:LMCAD) finally received regulatory clearance to take majority control of the company, and it did exactly that last month, when it moved to pushed its stake above 50%. The cynical stance is that there won’t be more buying pressure from Liberty Media now that it got what it wanted.
  • The end of the payroll-tax cut that gave employees 2% more in take-home pay came to an end in December, and fears that consumers will scale back in light of the hit to disposable income could sting subscription services, including Sirius XM.

Time will tell if the concerns were warranted, though the stock is currently trading higher for February. In other words, the shorts have been wrong so far. As long as an investor is confident of a stock’s fundamentals, it’s easy to approach a high level of short interest as a positive. The shorts will have to cover eventually, and that potential for a short squeeze could drive the stock even higher.

Boxing Pandora
Slacker is one of the earliest streaming services, but now it’s hoping to gain market share by attacking market leader Pandora.

A new attack ad pokes fun at Pandora’s limited library. The Slacker message is that it has 10 times the music of Pandora and that users can create their own playlists.

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