Is Sirius XM Stock a Buy, Sell, or Hold in 2025?

Here's a nice icebreaker for your next cocktail party: Ask a fellow investor for their thoughts about Sirius XM Holdings (NASDAQ: SIRI). The satellite radio provider is going to attract a range of opinions as wide as its programming.

Bulls will argue that Sirius XM stock is one of the market's most compelling value stocks, with a chunky dividend to boot. Bears will argue that the future is bleak for the premium audio content service, with a shrinking subscriber base to boot. Which camp has it right in 2025? Will reality fall somewhere in the middle? Let's take a look at the reasons Sirius XM is a buy, sell, or hold this year.

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Buy Sirius XM

Sirius XM stock has plummeted almost 60% since the start of last year. There are reasons for the decline -- and they will be addressed in the next section -- but it does pose an interesting value proposition. In a market that remains historically inflated despite the recent pullback, the highly profitable Sirius XM is trading for a mere 7.3 times this year's projected earnings.

It gets better. Despite a lack of growth in the past couple of years, Sirius XM is still generating 10-figure free cash flow. The $1.15 billion in free cash flow it's modeling for this year is actually an increase over the $1.02 billion it cranked out in 2024.

Sirius XM has done a good job of sharing the wealth, returning gobs of money to its investors. It has been aggressively buying back its stock, cutting its fully diluted share count in half over the past dozen years. The media giant has also consistently boosted its dividend since initiating a payout policy in late 2016. The cascading share price finds the yield clocking in at a beefy 4.7%.

Despite the headwinds, some potential catalysts are working in its favor. As a service consumed largely in cars, Sirius XM should benefit from companies asking employees to start commuting to in-person work again. The average age of passenger cars in this country last year was a record 14 years. An upgrade cycle should be coming if the economy stabilizes and auto loan rates keep dropping from last summer's high. This may seem like a compelling bullish thesis, but let's bring in the bears.

Image source: Getty Images.

Sell Sirius XM

It's not just the media stock that's falling. Revenue has declined in back-to-back years, and its own guidance calls for a 2% dip in 2025. Total subscribers for its namesake service have dipped in four of the last five years. Average revenue per user used to consistently tick higher, but it moved lower in 2023 and again in 2024.

It gets worse. Sirius XM has used its healthy cash flows to repurchase stock and boost shareholder distributions, but it's not being as aggressive with its borrowings. Long-term debt has inflated to $10.3 billion at the end of last year, widening the gap between its $7.7 billion market cap and its $18.3 billion enterprise value. Remember that jaw-dropping forward earnings multiple of 7.3? It balloons up to more than 17 on an enterprise value basis.

Sirius XM has tried to diversify its business model in an attempt to skirt concerns of the potentially transitory nature of its satellite-beamed platform. It has made sizable acquisitions to make a play for automotive telematics and the purchase of streaming pioneer Pandora. Unfortunately, the latter's active user base has fallen so much harder than Sirius XM's original platform that its flagship service continues to account for 75% of its revenue and the lion's share of its profitability.

Hold Sirius XM

It isn't hard to find motivation to hold Sirius XM. Berkshire Hathaway owns more than a third of its shares outstanding. Not only that, Warren Buffett's holding company has increased its stake three times over the past six months. If Buffett is buying the dip, why wouldn't less storied investors follow suit?

There's a lot of gray noise between the buy and sell camps. Sirius XM's stock has fallen harder than the fundamentals, but there are legitimate concerns about Sirius XM's long-term viability in a world of connected cars with Bluetooth access to cheaper mobile streaming apps. Monthly churn remains within its historical range. The challenge is signing up new drivers. What if auto sales pick up, but the sign-ups don't happen?

Howard Stern could retire later this year after a 20-year run on satellite radio. Sirius XM will save money, but will it lose listeners? It has signed up some popular podcasters, a move that could help it woo the young drivers it needs if it wants to grow again.

In the end, Sirius XM is riskier than its attractive valuation may seem to suggest, but it's still too cheap to ignore. The market seems to agree. As bad as this year has been for high-flying stocks, Sirius XM's just a nickel away from where it was at the start of 2025. I'm bullish on Sirius XM this year, but I can't ignore the potential pitfalls.

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Rick Munarriz has positions in Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.