One of the standouts of today's afternoon trading session has been Sirius XM, which logged a -2.0% drop and underperformed the S&P 500 by -2.0%. The Broadcasting stock is now trading at $4.2 per share and is -14.89% below its average target price of $4.93. Analysts have set target prices ranging from $3.5 to 7.0 dollars per share, and have given the stock an average rating of hold.
With a short interest of 26.9%, we can infer that the market sentiment on Sirius XM is negative. Each short position represents an investor's expectation and hope that the stock's price will reverse its present course and start falling.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
A possible indicator of market sentiment on a stock (besides its share price, of course) is the portion of institutional investors that make up its shareholders. Institutions such as banks, hedge funds, and wealth managers deploy significant resources towards identifying good investments. If they are invested heavily in a given company's stock, it could mean it's a good investment. Or it could mean the company is being targeted by a takeover attempt.
For what it's worth, institutions own 12.9% of Sirius XM's shares, which is an average amount. It means that many institutions are invested, but not to the extent that they would be in a stock such as Apple or Amazon, whose institutional ownership rates hover around 60%. Bear in mind that institutional ownership is just one piece of the puzzle in determining market sentiment, and you should not consider this factor alone in making an investment decision.
Overall, there is mixed market sentiment towards Sirius XM because of an analyst consensus of some upside potential, a hold rating, an unusually large proportion of its shares sold short, and a very small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about SIRI:
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It has trailing 12 month earnings per share (EPS) of $0.3 per share
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Sirius XM has a trailing 12 month Price to Earnings (P/E) ratio of 14.0 while the S&P 500 average is 15.97
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Sirius XM is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.33 and 3.12 respectively
