Why Sirius XM Plunged Today

Shares of Warren Buffett holding Sirius XM (NASDAQ: SIRI) were falling hard today in spite of the rest of the market attempting a comeback after Monday's huge marketwide plunge. Sirius' stock was down as much as 10% on the day at one point before recovering to a 6% decline as of 3:20 p.m. EDT.

The unique weakness for the stock came after the company's chief financial officer made cautious comments regarding advertising revenue at a financial conference today.

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Are tariffs affecting ad spend?

At today's Deutsche Bank Media, Internet, and Telecom Industry conference, CFO Tom Barry raised some concerns over advertising spending. Barry alerted investors that there has been a recent pullback in ad spending by consumer packaged goods and retail industries specifically, along with some concern the weakness may be spreading to other sectors as well.

It's quite possible packaged-goods companies and retailers are pulling back on marketing due to fears over tariffs, which could increase their costs. Recent consumer confidence numbers have also been lousy, and the uncertainty resulting from the administration's tariff negotiations may have led to major companies pulling back spending in anticipation of a potential economic downturn.

An ad slowdown would happen at a difficult time for Sirius

Sirius has been struggling over the past two years, as the company has shed subscribers due to higher inflationary pressures and a slowdown in new car sales.

However, last year advertising was actually a bright spot, growing slightly and making up over 20.3% of revenue, even as overall revenue fell 2.8%, due to a drop in the number of subscribers. Sirius had even hoped to reignite subscriptions by launching a free or low-cost, ad-supported tier in order to increase its addressable market with penny-pinching consumers.

Therefore, if ad sales slip, it would just be another headwind to Sirius' already-struggling top line and growth plans.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.