Sirius: Cheaper than a scratch-off and just about the same odds
Today's Financial News - Posted February 9, 2009
Sirius XM Satellite (NASDAQ:SIRI) investors have their hands full once again. After a wannabe rally last week, shares have been on the decline ever since. Even more shareholder wealth will be destroyed this week.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): It is a stock that will tease and trick you out of your hard-earned cash. It is sexy and alluring, yet it will take you out without a second thought. It is responsible for billions of dollars of destroyed wealth.
I sure hope you were not one of the folks buying shares of Sirius XM Satellite (NASDAQ:SIRI) last week on the news that an outsider was buying up the company’s soon-to-mature debt.
If you followed my advice, you sold your shares and ran from this dangerously speculative company. But if you went rogue and bought into the rally, you are sitting on some sizeable losses this week. Even worse, it looks like the losses will continue to multiply.
So far today, shares have lost over 7% of their value and are hovering at the $0.12 mark.
Today’s decline comes on the news that Sirius turned down an unsolicited deal made by EchoStar (NASDAQ:SATS) late last year. According to sources, the proposal would have been enough to pull Sirius out of its debt issues. Of course, it would have a new owner.
With just a week or so left until the company has its first round of debt obligations come due, Sirius has very few options if it cannot find a quick solution. According to the company’s controversial CEO, Mel Karmazin, Sirius has two options, bankruptcy or make a deal with EchoStar. That is not the kind of news a shareholder wants to hear.
Either way, they will lose money.
This is going to be an incredibly volatile week for Sirius, with speculators trying to pull share price in every direction. Rumors will be all over the place.
With expected price swings of 10% or more in the next few days, it is tempting to try to “trade” the company’s shares. But Sirius is so volatile and so unpredictable, you would have better odds betting on the ponies.
Shares of Sirius should not be traded on a stock exchange. They should be traded in Vegas.
Next Article: A good lesson from the biotech sector
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February 9th, 2009 at 6:35 pm
Lets just clarify here…Mel said IF he couldn’t come up with the 175 million, THEN
Sirius has two options, bankruptcy or make a deal with EchoStar. We already know this. What everyone’s betting on is does Mel have the 175 million covered like he said he would way back in November after all his cost reduction efforts including layoffs. Betting of course being the correct term here.