Two well known consumer favorites have seen their stocks take a major tumble in the past year, two years really, and recently have really taken a beating. I’m speaking here of Sirius/XM Radio (SIRI) and Starbucks (SBUX). Sirius is in my opinion in much more dire straits than Starbucks. Not only did their stock close at $0.20 a share today, there is a host of problems with the company. Least of which is pissing off listeners by merging their channels with XM. As the Motley Fool points out; They have roughly 3 billion shares outstanding, new cars aren’t selling with their tasty free trials of satellite radio, and, competition from standard radio, podcasts and music from their ipods are driving away subscribers.
Starbucks, a darling of investors for years has also seen it’s stock plummet. SBUX recently reported its profit fell 97 percent due to charges from closing underperforming locations in its fourth quarter ended Sept. 28. Same-store sales, or sales at stores open at least a year, dropped 8 percent. The shares are a measly $8 a share now.
Now surely these stocks are getting pretty much what they deserve..or are they? Have we gotten too negative on these companies? Is our faith in our economy really gone? Sure, these are companies that rely on the consumer, and are wants rather then needs. But from what I can see, people are still lining up every morning at my local Starbucks. And as a new subscriber to Sirius, I gotta say I love it. And most subscribers I talk to do as well and aren’t about to cancel anytime soon.
So, are these shares that should be sold? Forever? Or are these companies just going through a really bad patch? Better days will see their share prices rise again? No one can say for sure, but I have been tempted to buy some stock in Sirius. I know that bankruptcy is a real concern. But if they can hold on who knows. What do you think?
