Sirius XM (SIRI) - Get Free Report says that while it expects to report positive net new self-pay subscribers for the quarter ending June 30, a decline in U.S. car sales will weigh on that subscription growth during the period.
A substantial portion of the subscriber growth the satellite-radio company expected for its service was going to come from the sale of new and used cars, the majority of which come pre-loaded with the service, the company said in an 8-K filing Monday.
U.S. new-auto sales were down 47% in April and 29% in May, according to Sirius, with the sale of used cars also falling during that period.
About 80% of produced new vehicles have satellite radio, but the drop in auto sales that started in mid-March will hurt the company's trial subscriptions in the second quarter, resulting in fewer funnel leads for the subscription service.
Sirius, which is also the parent of internet radio service Pandora, says it has seen a dip in its trial conversion rate for car buyers and lessees this quarter, but that dip wasn't as steep as it originally anticipated.
Meanwhile, Pandora's advertising revenue has "fallen markedly" since March. The company expects ad revenue to be soft throughout the rest of the year.
The New York company said it was "subject to significant business, economic and competitive uncertainties" that are "generally beyond our control."
Sirius XM shares at last check were off 0.2% at $6.50. In 2020 through the close of trading on Friday, Sirius XM shares were off 9%.