What to Know Before Buying Sirius XM Holdings stock

If you own or lease a car, there's a good chance that you know about Sirius XM Holdings (NASDAQ: SIRI). After the 2009 merger of Sirius and XM, it became the country's lone player in satellite radio. Drivers pay between $10 and $25 a month for access to dozens of premium music, sports, news, and talk channels through car dashboards in vehicles with factory-installed satellite receivers. There's also a digital streaming component for access outside of the car or for drivers without factory-installed Sirius or XM receivers.

How well do you know the business, its competitors, and its largest shareholder? These are things you should probably have a good read on before becoming the next Sirius XM stock investor. Let's turn up the volume so you can decide whether the satellite radio provider is the right stock for you.

Image source: Getty Images.

How does Sirius XM stock make money?

As a paid subscription service, it's not surprising that Sirius XM makes the lion's share of its money from the monthly premiums it collects from its listeners. Subscription revenue accounts for $6.6 billion -- or 76% -- of the $8.7 billion it reported as revenue for all of last year.

Unlike traditional terrestrial radio that continues to crank out through the AM and FM bands on car radios, advertising is a small part of the business model for Sirius XM. Ad revenue for Sirius XM, as well as the Pandora streaming service it owns, clocked in just shy of $1.8 billion last year, 20% of the top-line mix. The remaining 4% of the business comes from the equipment, accessories, and other revenue.

Who are Sirius XM's biggest competitors?

Two decades ago -- around the time that Howard Stern signed the first of his four five-year deals that catapulted satellite radio to the mainstream -- Sirius XM's biggest rivals for driver eardrums were terrestrial radio and a car's CD or tape deck. The smartphone and connected car have made streaming service stocks, led by Spotify, the biggest competitors for satellite radio.

Sirius XM still served 32.8 million subscribers at the end of the third quarter of 2025. Revenue is declining slightly for the third consecutive year, but its monthly churn rate of 1.6% is within its historical range. The subscriber count peaked seven years ago at 34.9 million. Streaming options are gradually gaining market share, but it's been a slow fade out for Sirius XM.

Tell me more about Sirius XM's largest shareholder

You can buy shares of Sirius XM, but you won't out-own Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). Buffett's firm has been adding to its stake since the summer of 2024 and now owns a 37% chunk of the media stock.

It's easy to see the appeal of Sirius XM to its largest stockholder. Sirius XM may be struggling as a growth stock, but it's holding up nicely for value investors. It continues to generate annual free cash flow north of $1 billion, and it's trading for less than 7 times forward earnings, with a healthy current yield of 5.3%. There may be long-term viability concerns for the platform, and the debt is substantial, but it's still comforting to have Berkshire Hathaway in its corner.

Rick Munarriz has positions in Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway and Spotify Technology. The Motley Fool has a disclosure policy.