Top Investment Opportunities Currently: SiriusXM vs. Apple's Stocks
Rewritten Article:
Apple and SiriusXM make for an unlikely pairing in the investor world, but their shares have been capturing attention lately. Apple, a tech titan with its fingers in AI, smartphones, and wearable tech, and SiriusXM, an audio streaming giant focusing solely on subscription services, share a music service in common, but that's about it. So why compare them? Let's delve into the current state of each company to figure out which one is the better buy.
SiriusXM: Struggling to Maintain Subscriber Numbers
SiriusXM, known for its dominance in satellite radio and vehicle-based music subscriptions, wrapped up 2024 with 33 million subscribers. While a large number, it's concerning that this customer base has stagnated over the past few years. The company added 1 million subscribers by the end of 2024, but the growth rate has slowed dramatically from the past. Self-pay subscribers dropped from 34 million in 2023 to 33 million.
The music streaming industry is highly competitive, and giants like Apple and Spotify dominate the market. If SiriusXM's customer base is losing momentum, that's a red flag for potential investors. The company also generates revenue from advertising, but it remained essentially flat between 2023 and 2024, totaling at $1.8 billion.
SiriusXM's total sales decreased by 4% in 2024 to $6.6 billion, and the average revenue per user fell by $0.35 to $15.21.
Apple: Diversifying its Revenue Streams
Apple's most recent reported quarter saw iPhones accounting for 56% of its revenue, a sizable portion, but Apple boasts a far more varied business than SiriusXM. Approximately 14% of its revenue stemmed from services just five years ago, but now, services make up 21%. The tech industry can be unpredictable, and Apple has faced its fair share of challenges, but so far, the company has weathered the storms adequately.
Apple partnered with OpenAI to offload more complex tasks to ChatGPT, and it also introduced its own AI offering, Apple Intelligence, for its devices. Apple reported $124.3 billion in sales for its fiscal 2025 first quarter, up 4% from the previous year's quarter, and diluted earnings per share increased 10% to $2.40.
Despite some positive growth, iPhone sales remained stagnant compared to the previous year, and sales in China, Taiwan, and Hong Kong decreased by 11%. The threat of increasing trade tensions could impact Apple, given that a large percentage of its devices are manufactured in China.
SiriusXM is Cheaper, but Apple is the Better Investment
SiriusXM has piqued investor interest lately due to a couple of reasons. First, Warren Buffett's Berkshire Hathaway added more SiriusXM to its portfolio. SiriusXM's stock also trades at an attractive price-to-earnings ratio of just 7.8.
However, SiriusXM faces a steep uphill battle in the music streaming market. The subscriber numbers have shown signs of declining, and whether the drop will be gradual or steep is uncertain. Apple, on the other hand, boasts a diversified revenue stream, with a commitment to introducing new products and services to drive sales growth.
While Apple may be encountering a few challenges, its entrenched positions in services, smartphones, and wearables offer long-term opportunities. Investing in a company with a more diverse revenue stream and continuing growth potential might be the better choice.
Enrichment data:
SiriusXM's 2024 performance and outlook in the music streaming market can be broken down as follows:
- Subscription Numbers: As year-end 2024 approached, SiriusXM boasted a total subscriber base of approximately 33 million, a growth of 0.03%. The company added 1 million self-pay subscribers in the fourth quarter of 2024 but lost 296,000 self-pay subscribers overall in 2024.
- Trial Funnel: By year-end, SiriusXM's trial funnel reached 7.3 million, representing an increase of 50,000 from 2023 and a significant leap from 2022 with 6.8 million trial subscribers.
- Competitors: Apple Music and Spotify are the primary competitors in the music streaming market. Apple Music offers on-demand streaming, personalized recommendations, and a variety of subscription plans, including individual, family, and annual plans. Spotify's extensive music library and on-demand streaming capabilities make it a formidable competitor.
- Challenges and Strategies: SiriusXM faces intense competition, declining subscriber numbers, and changing consumer preferences. Partnerships with content creators and vehicle manufacturers offer some possibilities for future revenue. SiriusXM is also debuting a free, ad-supported radio tier to attract more users and compete with over-the-air radio.
SiriusXM is targeting $1.15 billion in free cash flow and additional run-rate savings in 2025. The company is expanding its free ad-supported radio tier to vehicle manufacturers to attract more users and maintain market share.
SiriusXM's struggle to maintain its subscriber numbers and the slowing growth rate could be a concern for potential investors in the finance world, as it competes with giants like Apple and Spotify in the highly competitive music streaming market. On the other hand, Apple's diversification of its revenue streams, with services becoming a significant portion of its income, and its partnerships with OpenAI and introduction of Apple Intelligence, make it an attractive investment opportunity for those interested in money and investing.
