NEW YORK ( TheStreet) -- Although shares of Sirius XM ( SIRI) have been on fire all year, up well over 30%, there are many who still question whether the company's business model is sustainable.
There's no other explanation for the fact that the company's short interest position, which is now up to 353 million shares, has steadily grown. This has occurred even as Sirius continues to post strong subscriber growth numbers. Despite overcoming its near-death experience in 2008, the shorts have never believed in Sirius' survival. Essentially, there are 353 million shares that have been sold short, and these investors are betting on the company's demise -- hoping to make money should the stock fall. Admittedly, there was a point when I had my own doubts. I'm not going to pretend that I was always faithful.
Now, with Apple ( AAPL) and Google ( GOOG) entering the audio streaming fray, bears are lining up with shovels ready to dig Sirius' grave and hoping to make out like bandits. Sirius, however, has other ideas. Following a solid second-quarter performance that produced record results in virtually every metric, Sirius' management has every intention of proving these bears wrong. The company reported profits of $125.5 million, or 2 cents per share on revenue of $940.1 million. While this may seem by some as a year-over-year decline in profits since Sirius earned $3.1 billion in last year's quarter, it's not exactly apples-to-apples. Last year's reversal of $3 billion of deferred income-tax valuation allowances was the main driver of that profit surge. Even with the 2 cents per share earned in this quarter, the company still met Street estimates. Likewise, revenue of $940.1 million was good enough for a 12% year-over-year improvement, enough to beat the consensus estimate of $935 million. Elsewhere, the company announced a 15% increase in net subscriber additions, or about 716,000. This means Sirius ended the quarter with 25.1 million total subscribers, which is a 9% year-over-year increase. I don't believe there is a company out there in the subscription-only entertainment industry that can match Sirius subscriber growth performance over the past couple of years. I won't disagree that Netflix ( NFLX) comes close. But here's the difference: As much as I've always liked Netflix's results, from a subscriber retention perspective it's been tough to gauge how Netflix has performed quarter to quarter and year over year.