NEW YORK (TheStreet) -- Sirius XM Radio (SIRI) - Get Sirius XM Holdings, Inc. Report was nearly home free.

The New York-based satellite operator's stock had topped the dollar mark to maintain its Nasdaq listing and stayed there for eight of the required 10 days to regain compliance. Then, yesterday, Sirius dropped 13 cents to close at 89 cents. It now needs to close above $1 today and each day for the next 10 to regain compliance by the March 15 deadline. Should the company close below $1 today, the company would be unable to regain compliance from gains alone since the deadline is just 10 business days away.

Sirius will likely need to execute a reverse split to regain compliance with the Nasdaq exchange since the gains are a gamble at best. Doing so would compress the number of shares available, artificially raising the share price in the process.

Liberty Media

(LCAPA)

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had saved Sirius last year by extending credit. Liberty has also been the subject of chatter that it could buy the struggling satellite radio company and save it from the stock market. At this point, those rumors are unfounded, and investors shouldn't bet on such a transaction. Sirius would be an expensive acquisition and may be out of the reach of Liberty, which already shoulders a large amount of debt.

The decline yesterday looks odd in light of its timing. Perhaps short sellers, who bet on share-price declines, depressed the stock. Relevant news that could have hurt the stock was a ratings downgrade by Wunderlich Securities, a small firm with limited influence.

Sirius' rabid fan base may point to the stock-price decline as evidence of manipulation. The effect of a reverse split, in theory, shouldn't alter the value of a company, since the process merely changes the divisor of the market value. In reality, reverse splits can signal desperation.

Then again, a reverse split would make the company more attractive to institutions that have restrictions against investing in stocks with prices below $5. As a result, Sirius could gain larger investor base if the stock price rises high enough. Nevertheless, the next 10 days will be crucial for Sirius.

-- Reported by David MacDougall in Boston.

Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.