What will happen to the share price of Siri when the stock reverse split occurs at the end of the third quarter?

The share price of Sirius XM Holdings Inc. (SIRI) is likely to increase following the reverse stock split. Here's a detailed analysis:

1. Strategic Reasons for the Reverse Split: The reverse stock split is part of a broader strategy to combine with Liberty Media’s Sirius XM tracking stock group and consolidate the share base. This is not being done to address a delisting threat, but rather to align with the company's strategic goals.
2. Market Perception and Investor Sentiment: Despite the negative connotations often associated with reverse stock splits, Warren Buffett's significant investment in Sirius XM suggests confidence in the company's long-term prospects. This indicates that the market may view the reverse split positively, especially if it is seen as a strategic move to strengthen the company's market position.
3. Historical Performance: Sirius XM has executed a reverse stock split before, in July 2009, to address its low stock price and ensure compliance with NASDAQ listing requirements. Following that reverse split, the company achieved consistent subscriber growth and improved financial performance, leading to a recovery in its stock price.
4. Financial Health and Growth Prospects: Sirius XM operates as a "legal monopoly" in the U.S. satellite radio market and generates approximately 77% of its revenue from subscriptions, providing a more predictable cash flow. The company also has a strong market position and is expected to benefit from the upcoming merger with Liberty Media.
5. Valuation and Analyst Price Targets: Despite the recent surge in stock price, Sirius XM is still trading at a historically low valuation, with shares trading at just eight times forward earnings. This low valuation could attract more investors and contribute to a potential increase in share price.
6. Potential for Share Price Appreciation: The implied upside for Sirius XM stock, based on high-water price targets from analysts, is significant, with some analysts predicting an increase of up to 130%. While these targets are not directly related to the reverse stock split, they do indicate a positive outlook for the company's stock price.

In conclusion, while the reverse stock split is likely to lead to an increase in the share price of Sirius XM, the actual impact will depend on a variety of factors, including market conditions, investor sentiment, and the company's ability to capitalize on its strategic positioning in the satellite radio market.