For the last year or two everybody has been talking about the Satelite Radio Industry. Even though this is a new industry, people are already buying this technology. What people forget is that XM and Sirius are still purely speculative because they aren’t even making a dime right now. Also, people are paying an extremely high premium to book and sales. This of course is with earnings in negative territory.
Even though XM and Sirius may have bright futures, there stock price is taking into account this already. So even if these companies go onto to become great, it may take many years to make a return on ones investment.
A perfect example of this nonsense sounds something like this.
“I am going to buy Sirius because when Howard Stern starts broadcasting, this stock will take off”
What people don’t realize is that the price already takes into account Howard Stern and assumes that Sirius is a great company. With so much news and speculation on Sirius, I would stay away from this stock. If you own shares, sell them. If you are thinking about it, well don’t. Just take the money and buy a Sirius Subscription.
Eric Schleien
zachary
teenmoney
josh4580
Carlton
[...] By Eric Schleien On November 11, 2005 I posted an article called a Sirius Misconception. I explained my reasoning for why I thought Sirius (SIRI) was overvalued. Negative 50% later I still want to say that I still don’t think it’s cheap. [...]