NEW YORK (TheStreet) -- There's never a dull moment in SIRI-land. Shares of Sirius XM (SIRI) jumped more than 3% Wednesday on news that the satellite radio provider will offer subscription trials to customers that rent vehicles from Avis Budget (CAR).
If you recall, since Liberty Media (LMCA) announced that it was no longer interested in buying the remaining portions of Sirius it doesn't already own, Sirius stock has been in a perpetual decline despite bullish notes from three analysts who have issued price targets on Sirius stock of $4 or more. The stock closed Wednesday at $3.34; shares are down 4.2% year to date.
Investors are jumping for joy, applauding the new Avis Budget relationship. Details of the deal suggest that Sirius' programming will be made available to Avis Car Rental and Budget Car Rental fleets. All told, this will expose potential Sirius subscribers to roughly 60% of Avis Budget vehicles across the country now.
Rick Munarriz of The Motley Fool calls this a "big win for Sirius XM." But is it? I fail to see what the big deal is. The agreement says Sirius will be made available as a premium add-on, which means customers will have to pay to listen. I don't see how it helps consumers who don't already know about Sirius gain exposure to the service.
Customers who want the service have to shell out an extra $6.99 for the first day of the rental and $3.99 every day after that. This fee is on top of what they must pay daily for the car.
What's more, while the deal does suggest that Sirius is looking for increased exposure, it's not entirely new. Sirius has had car rental deals for years, including its existing relationship with Hertz (HTZ). As with Avis Budget, Hertz also has a $6.99 charge for the premium add-on.
The only difference is that the Hertz deal stays at $6.99 through the term of the rental. The price does not drop on the second day. Nor is it capped at $19.99 if the vehicle is rented for a week's period. And let's assume Sirius does gain subscribers from the rental business; doesn't change the fact that Sirius' main revenue sourced remains tethered to the car.
Until Sirius figures out another revenue stream outside of the auto, this stock is going to remain under pressure. Apple (AAPL), which recently unveiled its CarPlay system, has gotten into the driver's seat and has already struck deals with several car manufacturers to control the dashboard.
This is the first sign that hints at Apple's ambitions for the connected car. And we know Google (GOOG) can't be far behind. These moves, along with competing services from Pandora (P), the market leader in radio listening, is forcing Sirius' hand.
I don't think this deal with Avis Budget is going to cut it. And that the stock has risen because of it suggest how the key drivers of this company continue to be ignored.
At the time of publication, the author was long AAPL.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.