Sirius XM shares edge up after massive EPS miss on subscriber decline
Radio company lost 301,000 self-pay subscribers in 2025 despite beating revenue expectations
Sirius XM Holdings shares edged higher in Wednesday trading despite the company reporting a staggering 69% earnings miss for the fourth quarter, as declining subscriber numbers raised fresh questions about the satellite radio operator's growth prospects in an increasingly competitive audio landscape.
The company reported earnings per share of $0.24 for the quarter, far below the $0.78 expected by Wall Street analysts, according to the company's earnings release. Net income plunged 65% year-over-year to $99 million, reflecting mounting pressure on the business despite revenue of $2.19 billion that slightly topped the $2.14 billion consensus estimate.
The core of Sirius XM's challenge lies in its shrinking subscriber base. The company lost 301,000 self-pay subscribers throughout 2025, while monthly active users on its Pandora platform declined 5% during the period. The subscriber losses mark a troubling trend for a company that built its business on the growth of satellite radio subscriptions, particularly as consumers increasingly shift to streaming alternatives from Spotify, Apple Music, and ad-supported platforms.
"The massive EPS miss of -69% versus estimates is extremely concerning, especially when coupled with the accelerating subscriber losses," analysts noted. The performance suggests Sirius XM is struggling to retain customers despite its exclusive content partnerships and automotive relationships.
Despite these challenges, Sirius XM's stock was up 2.9% in recent trading at $20.73, reflecting investor focus on the company's strong free cash flow generation and stable forward guidance. Free cash flow reached $1.26 billion for the year, up 24% year-over-year, demonstrating the company's ability to generate cash even amid operational headwinds.
For 2026, management maintained guidance for approximately $8.5 billion in revenue and $1.35 billion in free cash flow, suggesting stability rather than growth. The company returned $501 million to shareholders during the period through dividends and share repurchases, continuing a strategy that has made the stock attractive to income investors with its 5.3% dividend yield.
The modest stock recovery comes after a difficult 12-month period that saw shares decline 15.8% through early February, including a 3.2% drop in mid-January after market commentator Jim Cramer expressed concerns about the company's growth prospects. The stock is currently trading well below its 52-week high of $27.41, reached earlier in the year.
Analysts have highlighted Sirius XM's valuation as potentially attractive at current levels, with the stock trading at roughly 5.6 times projected 2025 free cash flow. However, concerns persist about the company's $10 billion debt load and two consecutive years of revenue declines, which limit financial flexibility in a competitive environment.
Looking ahead, investors will be watching whether new low-cost, ad-supported offerings can stimulate subscriber growth and reverse the declining user trend. The company's ability to leverage its content partnerships and automotive relationships will be critical to maintaining market share against increasingly sophisticated streaming competitors that continue to invest heavily in original content and personalized experiences.
Sirius XM's next quarterly dividend of $0.27 per share is scheduled for payment on February 27 to shareholders of record as of February 11, providing continued income support even as the company navigates its strategic challenges in the evolving audio entertainment market.