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Before making an investment decision, you need to understand a company’s business.
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Sirius XM consists of two distinct businesses: its namesake division and Pandora.
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GoPro is known for its sports-oriented cameras, but now it faces some serious competition. .
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10 stocks we like better than Sirius XM ›
It is constructive to compare companies to see which represents a better long-term investment. Of course, your risk tolerance also plays a role. When examining a stock investment, it is important to remember that you are participating in the ownership of a company. Therefore, you must understand its underlying fundamentals.
It’s time to take a deeper look at Sirius XM (NASDAQ:SIRI) and GoPro (NASDAQ: GPRO) to determine which offers better investment prospects.
Sirius XM actually consists of two businesses. There is its eponymous division and then there is its Pandora platform.
The Sirius XM segment offers a variety of content, including music, sports, comedy and talk, on satellite radio. It generates most of its revenue through subscription fees. Its Pandora segment operates a music, comedy and podcast streaming platform that allows listeners to personalize the experience. This business produces most of its revenue from advertising.
Both businesses face stiff competition, including free radio and other entertainment venues such as video streaming services. They have struggled with rising incomes. In the Sirius XM segment, self-pay subscribers continued to decline. There were 31.2 million as of September 30, up from 31.5 million a year ago. That helped third-quarter revenue fall 1% to $1.6 billion.
Its smaller Pandora division saw a tepid 1% year-over-year increase in revenue to $548 million. Advertising revenue rose 2% to $416 million, but that was due to higher technology and podcast fees. With Pandora raising its subscription prices and losing 184,000 subscribers over the past year to 5.7 million, advertising rates may come under pressure. Across all services, Pandora had 41.6 million monthly active users, 2.2 million fewer than a year ago.
GoPro has become known for its cameras that users wear on their heads and capture videos of people doing various activities. It also sells camera mounts, accessories and equipment (such as bags and backpacks). The company’s products had the “cool” factor, but competitors have put intense pressure on GoPro’s revenue. This includes the best video functionality of smartphones.
GoPro’s third-quarter revenue plummeted 37% year over year to $163 million. It sold around 500,000 units of cameras, 18% less than a year ago. Management has been pushing subscriptions, which would provide a more predictable revenue stream. However, subscription revenue fell 3% to $27 million.