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

Tuning in to Sirius XM (NASDAQ: SIRI) has been a static-filled experience for investors, with shares down 50% from their 52-week high at the time of writing. The satellite radio giant has struggled with weak growth, leaving many searching for the right frequency to turn things around.

Despite the noise, it's hard to tune out this industry leader, which still boasts an audience of 160 million listeners across its platforms and a loyal subscriber base that generates significant cash flows. For income-focused investors, the stock's 5.2% dividend yield deserves some attention.

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What should investors do with shares of Sirius XM now?

The case to sell Sirius XM stock

Satellite radio is no longer the groundbreaking novelty it was when Sirius XM beamed its first commercial broadcast in 2002. Much has changed in the media landscape over the past two decades, with the once-disruptive technology being overshadowed by more convenient internet music services that most people can access via mobile broadband-connected smartphones.

Sirius XM's partnerships with global auto manufacturers, which preinstall special hardware and offer free trials of the service with new vehicles, have failed to stem the steady decline in subscribers over the last several years. The company now competes not only with audio streaming platforms like Spotify Technologies, but also with music services from tech giants such as Amazon and Apple. This shift is reflected in its growth trends.

In the last reported fourth-quarter 2024 results (for the period ended Dec. 31, 2024), Sirius XM's 33.2 million paying subscribers fell 2% year over year, down 4.9% from its 2019 peak. Trends from the Pandora and other off-platform services segment fared worse, with total active users down 6% in the past year, suggesting it's losing market share without brand momentum.

With full-year revenue falling 4% from 2023, the company's strategy has been to control costs while focusing on its core strengths to at least stem the subscriber decline. Sirius XM is betting on exclusive content like live sports audio, podcasts, and celebrity-hosted shows to kick-start a comeback.

Nevertheless, investors skeptical of Sirius XM reclaiming its competitive edge have ample reasons to sell the stock now, favoring better opportunities elsewhere in the market.

Image source: Getty Images.

The case to buy or hold Sirius XM stock

The growth numbers from Sirius XM don't inspire much confidence, yet the company is still supported by some fundamental strong points. The good news is that the underlying business remains highly profitable, with nearly 40 million paid subscribers between the core Sirius XM platform and Pandora along with more than 120 million ad-supported listeners across all platforms delivering $1 billion in free cash flow last year.

The company's ability to maintain that core base can represent real value for shareholders. Wall Street analysts project total annual revenue holding steady at around $8.5 billion between 2025 and 2026. Estimated earnings per share (EPS) of $3.02 this year could tick higher to $3.05 next year, assuming financial margins and subscriber trends stabilize.

Data source: Yahoo Finance. YOY = year over year.

That outlook is encouraging for investors eyeing the stock's $0.27-per-share quarterly dividend, yielding 5.2%. Importantly, the annualized payout, representing a $388 million cash distribution, appears sustainable for the foreseeable future, well covered by recurring cash flow and earnings.

By this measure, perhaps the best reason to buy and hold Sirius XM stock now is precisely for that high-yield income opportunity. The stock is also cheap, trading at a forward price-to-earnings (P/E) ratio of 7 based on the consensus 2025 EPS, likely reflecting its high risk. The share price could fall further, but investors are getting paid to wait for growth to improve. On the upside, the potential for better-than-expected operating and financial trends could be the catalyst needed for shares to rally sharply higher.

SIRI Dividend Yield data by YCharts

Proceed with caution

Given the uncertainties surrounding Sirius XM's growth prospects and the delicate macroeconomic environment at the start of 2025, exercise caution. For existing shareholders, holding the stock to collect the dividend can make sense, while new investors may want to avoid it. Disappointing subscriber numbers and downward revisions to earnings estimates could lead to further share price declines. Until the company demonstrates a clear path to driving growth, I predict shares of Sirius XM will remain volatile.

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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.